L. 0 (100%), but if you do not want to wager the full. The required calculation would be as follows. 67% of your account balance on a single trade. The standard kelly betting is 1. L. 4. The benchmark for new traders to move on from paper trading is a win rate of 75% and a profit factor of 2, so an average win of say $1 and average loss of -$1. If I run 60% pop50 strategy and place ten small trades (takes a lot of research. 67%. Facebook. Read William Hill Review. We use an example to explain the trading model. Losing the first bet and winning the second will lose $4 more. $egingroup$ @elemolotiv I read a lot more after that post. 6. Library "FunctionKellyCriterion" Kelly criterion methods. addition to trading signals, a suitable trading strategy is also crucial. Library "FunctionKellyCriterion" Kelly criterion methods. Users of the betting exchange versions of the calculator can enter the back and/or the lay odds. It suits long-term trading. The Kelly bet size is found by maximizing the expected geometric growth rate. Many well known investors use it, including Warren Buffett and Bill Gross. Kelly system betting provides an objective answer on how to make your bankroll grow as fast as possible. The Kelly Criteria is an interesting thing to play with. ( (0. Kelly Criterion Calculator Kelly Criterion Calculator The Kelly criterion is an advanced money management method that helps traders determine what proportion of their trading capital should be invested in a particular position. 2. 60 = 0. : Application of the Kelly criterion on a self-financing trading portfolio—An empirical study on the swedish Stock Market from 2005–2015. In this section, we propose an option trading model, which better fits the usage of the Kelly criterion. 1. Information wants to be free. A. Currently i risk 2% of capital. Say 100k capital. Your 'odds offered' are '2 to 1' (so enter 2 ). 5. The formula in D5 is where Kelly does the magic: =(D1*D3-1)/(D3-1) The result is the proportion of your bankroll recommended by the Kelly Criterion. Parameters: win_p: float, probability of winning. p. 00 =. In currency pair trading, the Kelly criterion can be applied to determine the optimal position size based on the trader’s past performance. Generally, the Kelly criterion is a formula that maximizes the expected value of the logarithm of wealth that is equivalent to maximizing the expected long-term growth rate. The famous coin-flipping exercise that many investors use to measure the performance of chance. 67 billion is largely attributed to Wynn Resorts’ Macau operations. It results in the maximum expected rate of bankroll growth, and is the optimal strategy for money management in betting games. 26%. Hence, the Kelly criterion can be very risky in the short term. Preventing big losses 2. 045% with a p-value of 1. If you decide on 1%, you are betting $10 for a $1000 bankroll. One thing that complicates the matter is that short term results can vary widely from the long term. Strategy): def __init__. We consider Banca Intesa as the reference stock. Trading using the Kelly Criterion produces the fastest growth. Specifically, we’ll go over the Kelly Criterion with a concrete example in…. s = b * (o. For example, if the potential profit is 20% and the stop loss is. Refresh the page, check Medium ’s site status, or find something interesting to read. 025. The Kelly formula is : Kelly % = W – (1-W)/R where: • Kelly % = percentage of capital to be put into a single trade. Works best when used in retrospect. input 0. It is widely applied to sports betting and casino gambling. ) 2) Reward per Dollar Risked: Enter the amount of capital your strategy, on average, profits. I start trading a mean reversion strategy with a 70% win rate, and $200 risked per trade. The Kelly Criterion is a formula invented by J. Futures and options trading involves a substantial risk of loss. Interactive Brokers: My Main Brokerage PlatformCLICK HERE - this FOREX and CFDs position size calculator to easily calculate the correct number of lots to be traded. Here p s is the fraction of wins that in the long run tends to p. The Kelly Criterion is a money management formula that calculates the amount you should bet when there is a difference between the “true” odds and the given odds. In his paper “The Kelly Criterion in Blackjack, Sports Betting, and the Stock Market”, author Ed Thorp derives the biased coin-toss model for even money in which the betting fraction f*=p-q, or the probability of winning minus that of losing, but in the situation of uneven money it’s f*=p/a-q/b. the Kelly Criterion formula to calculate your stake. 00 being returned. The following deriva-tion is modi ed from Thorp [1]. Even if using 20% of an ever decreasing account balance never blows out your account completely, this is not smart trading. 3. If you can calculate the probability of winning on each bet or trade and the ratio of the average win to average loss, then the Kelly criterion will give you the optimal fraction to bet so that your long-term growth rate is maximized. It helps calculate the optimal amount one should place on a bet or an investment. RoR can be calculated using the formula: Here’s an example: Suppose I have a $10000 account and I decide to risk 30% of it. The formula takes advantage of the law of large numbers in probabilities. There are two key components to the formula for the Kelly criterion: the winning probability factor and the win/loss ratio. This tool can be used to compare markets and odds, as well as find the implied win percentages for a given team. To calculate the optimal Kelly criteria for each asset, it can be demonstrated that: F∗ = C−1(M– R) F ∗ = C − 1 ( M – R) Where C C is the covariance matrix and M– R M – R the excess returns. Keywords: Kelly criterion Option trading Profitable gamble Optimal f 1 Introduction The Kelly criterion [1] can be regarded as an optimization process for wagering ratios. 05/1)/2 = . It. Generally, the Kelly criterion is a formula that maximizes the expected value of the logarithm of wealth that is equivalent to maximizing the expected long-term growth rate. Ubzen 2012. 2. This money management system is best. For example, a bet placed at -122 odds has an implied probability of 55 percent. You're advocating using full Kelly to calculate the stake/units staked within a unit staking system. Kelly can be murder during a bad losing streak, so sports bettors often reduce the Kelly. In addition, we know that the average winning trade produced a profit of $1500, and the average losing trade lost $500. PK. From the graph, betting with the Kelly Criterion clearly has an advantage over constant betting. With its gambling origins, does the Kelly Criterion have any application in the trading world? Let’s put it to the test!🔴 Use StrategyQuant to automatically. as I said, I only do 2 tables at most, so its not a problem. 12 winning trades out of 20 total gives 60% Winners) These columns have the greatest impact on the Kelly equation. b = the decimal odds – 1. 30, up 598%. When applying the Kelly Criterion to stock prices, or markets more generally it’s obvious to see that the formula can’t possibly work. When this strategy is used in betting, it is calculated as; Kelly %= W [ R/ (1 W )] In the above formula, Kelly % refers to the percentage of capital an investor puts in a single bet or trade, W in the formula means the records of wins the trading system. portfolio strategy is using the Kelly criterion to calculate how much you are willing to invest in an asset. This is where the Kelly formula comes into play: K = ( PxB – (1–P) ) / B. The Kelly Criterion requires there are no other rules other than the Kelly Criterion. This means if the Kelly Criterion advises a bet at 10% of your bankroll, if you’re using 1/2 Kelly it would be 5%, 1/4 2. The Kelly Formula is: Kelly % = W – (1-W)/R where: * Kelly % = percentage of capital to be put into a single trade. 067 or 6. where: K – optimal % risk. 4. This gives us a Sharpe Ratio of S = 0. Kelly Criterion Calculator - Know Your Stakes Quickly - Kelly Criterion determines how much of a stake you should risk on a favorable bet, is a popular staking method which suggests that your stake should be proportional to the perceived edge. The Kelly Criterion assumes that the purpose of your trade is to maximize your growth of capital, and will reinvest your winnings. If you have no edge, the optimal bet size would be 0. Search in titleThis paper presents a model to address the uncertainty inherent in replacement problems, whereby a firm must select between mutually exclusive projects of unequal lifespans by applying the Kelly criterion (which is not well known to the engineering economics community) within a binomial lattice option-pricing environment. A simple approach to non-normal Kelly. 11 hours. Feb 7, 2021 • Joao Rodrigues • 11 min read Kelly Criterion Monte Carlo. 01. 30. John Larry Kelly Jr. g. So if your edge is 10% on a bet at even-odds, Kelly says to bet 10% of your bankroll; but for the same 10% edge on a bet at 10-1 odds, Kelly says to bet. Last, the financial data are always massive. For a strategy with an equal stop loss and profit target (1-to-1 odds in gambling), and a 60% win rate, the Kelly criterion produces an optimal bet size of 20% of your account. cash or bonds). Consider how aggressive Full Kelly is, and if that's truly your risk appetite. Kelly Criteria and the Kelly Formula. In the third event on the Belmont program, you find an angle play that has a 15 percent strike rate and 8-1 average winning odds. Financial trading is an interesting research issue to many experts and scholars. Kelly Criterion มีที่มาอย่างไร ผมไม่ขอพูดถึงเยอะ เนื่องจากที่ผ่านมามีหลายบทความหรือเพจต่าง ๆ เขียนอธิบายไว้แล้ว แต่ผมจะขอสรุปสั้น. if your max loss is 50%, optimal-f will be double kelly. The intuition is that over multiple periods the geometric average return is. The Kelly Criterion is a mathematical formula that helps gamblers determine optimal bet sizes and maximize profits. 65) – 0. KELLY CRITERION | Ed Thorp | Optimal Position Sizing For Stock TradingThe Kelly Criterion calculation was created by Ed Thorp and made specifically to beat t. If you can find an exploitable, repeatable edge, Kelly's system tells the maximum you should bet based upon. Calculate the Kelly Criterion. The Kelly Criterion is to bet a predetermined fraction of assets, and it can seem counterintuitive. 5) ell = 2 (p - 0. Download our free and easy-to-use Kelly Criterion Calculator by downloading this excel. In probability theory, the Kelly criterion (or Kelly strategy or Kelly bet) is a formula for sizing a bet. Add the odds quoted by the. if your max loss is 50%, optimal-f will be double kelly. E. The Kelly criterion is a formula used in investing to calculate the optimal amount that should be allocated in future trades based on historical performance. And at Caesars, the race took the checkers from NASCAR, which has leaned hard into sports betting as a fan-engagement vehicle. L. The Kelly criterion, developed by John L. PointsBet, the renowned sports betting and iGaming firm, has released its Q1 financial report for the 2024 fiscal year, covering the trading period ending on Sept. In addition, the Kelly criterion is applied to determine the proportion of money invested in stock to decrease the risk of trades. Put simply, the Kelly Criterion or Formula is a way to calculate how much of their assets a Forex trader should risk on any given trade in order to maximize the return. exp E log ( R) = p log ( 1 + f b) + ( 1 − p) log ( 1 − f a) = ( 1 + f b) p ( 1 − f a) 1 − p ≡ r. e. By using the Kelly criterion formula, you can make informed decisions. More than 100 million people use GitHub to discover, fork, and contribute to over 330 million projects. Kelly Criterion. The Kelly formula is : Kelly % = W – (1-W)/R where: Kelly % = percentage of capital to be put into a single trade. The Kelly Criterion isn’t perfect considering it doesn’t take into account our level of confidence for a given trade, however, it does give a really solid reference point. If you change your trading system in any way it invalidates your Kelly Criterion results. 14 powerful trading calculators | Trade Optimizer Tools for professional traders. 77 = $91. Today the best prop trading firms use this formula to maximize the possible. The system will automatically calculate everyday 12AM while I want to add another function which is auto placed order with certain stakes (by applied Kelly criterion model) once got the calculated forecast price. Those are all very bad assumptions which leads to the criticism of Kelly or Optimum-f. For example, a wager with a 60% chance of being successful has a 0. First, you decide what percentage you would like to bet. GameStop Moderna Pfizer Johnson & Johnson AstraZeneca Walgreens Best Buy Novavax SpaceX Tesla. The Kelly criterion calculator is a powerful tool for managing your money when gambling or investing. John Larry Kelly Jr. The other is the lot size will show at the bottom. Kelly Criterion is a great tool to help you optimally size your positions to maximize the long-term growth rate of your portfolio. The Kelly criterion is based on a trader’s history of at least 100 trades. Mutual Information. the Kelly Criterion to the stock market. The Kelly Criterion is the brilliant summation of a betting strategy first discovered by Information Theorist John Kelly. The Kelly criterion is a formula developed by John Larry Kelly in 1956. Kelly's criterion where Example of the optimal Kelly betting fraction, versus expected return of other fractional bets. 82*((X/Y) + 1) - 1)/(X/Y) comments sorted by Best Top New Controversial Q&A Add a Comment. Many adages exist: don't bet more than 2% on one trade, don't enter trades that don't have x% upside, never bet on the same stock twice in quick succession, etc. The first of these is the probability of a positive outcome, or a winning trade. 5. 1. W = Number of winning trades / Total number of trades. For example, if you have $10,000 in your trading. q. We explain how it works, and discuss its advantages and disadvantages. In this note I show how to calculate the variance of the estimated Kelly criterion ratio. Learn how to make high probability bets and make income at the link below"WELCOME20" to get $20 off your first month!Kelly Crite. The multiplier is normally set to 50%, for an aggressive betting strategy set it to 100%. 6 winning probability. 2 Thesis question. In probability theory, the Kelly criterion (Kelly, 1956) [] gives the bet size conditions required for gambling wagers to almost surely achieve the maximum exponential growth rate of wealth (or “bankroll”) based on assumed probability of success if the wager were to be placed repeatedly ad infinitum. Also, learn money management terms and identify inherent risk in the financial markets. The Kelly Criterion is 6. Suppose you run a trading portfolio and you know your past trading historical performance. It turns up in many other sources, including NASDAQ, Morningstar, Wiley’s For Dummies series, Old School Value, etc. But in most cases, to win on a trade we need. SBR provides a full range of free sports betting calculators to help you find great value, manage your bankroll and generate an overall profit. I tried to write a real-time trading system, however do not know how to fit a Kelly model into the system. q. rr: float, reward to risk. However, unlike in the previous situation we examined the Kelly Criterion for, there is not a nite number of outcomes of a bet on a security, so, we will use The Kelly Criterion is straightforward to calculate: you only need two inputs to determine the optimal betting size: The win/loss ratio – the win percentage of your trading strategy (R) (dividing the total gains of the winning trades by the total loss of the losing trades) The win ratio of the trading strategy (W) (the number of trades that. And that article is using the same hypothesis that I am - look at your OWN trading record to calculate probabilities, etc. More precisely, for the case of one stock modelled with geometric Brownian motion, one obtains a Kelly frac-Keywords: Kelly criterion Optimal fraction KL-divergence 1 Introduction Financial trading is an interesting research issue to many experts and scholars. The second is the total win loss ratio, which is made up of the total number of winning trades divided by the total number of losing trades. Sell options. A much simpler derivation of the Kelly Criterion. I risk 2k. The Kelly Criterion is a mathematical formula used to determine the optimal amount to bet based on the edge you have over the sportsbook. Written. Free Download. 1. 3 – [ (1 – 0. - Kelly Criterion - Historical performance based risk Option Trading Tools: - Covered Calls - Buy stock. If it hits my stoploss, i lose ~2k. 20 or 20%. 40) / 1 = 0. A 50% chance of a 50% drawdown is a lot to stomach. Trading----2. simplified(win_p, rr) simplified version of the kelly criterion formula. ” Kelly Multiplier RoR can be calculated using the formula: Here’s an example: Suppose I have a $10000 account and I decide to risk 30% of it. To calculate the optimal bet size use Kelly's criterion . Marcin Zamojski School of Business, Economics and Law at the University of Gothenburg Institution: Financial Economics Credits: 15 ECTS Authors: Emil Ohlsson and Oskar MarkussonThe Kelly Criterion is a formula that calculates the optimal staking plan for a series of bets. The Kelly Criterion is a mathematical formula that helps gamblers determine optimal bet sizes and maximize profits. P – odds of winning. 1. Here is how to optimize a variable using the "Kelly Criterion" script: - Create a new trading system then add the Kelly Criterion. A 1997 paper by Ed Thorp, a smart man who basically got rich using the Kelly Criterion. Here, WR is also the win rate (in decimal form) and PR is also the payoff ratio. Big-time investors such as Warren Buffett and Bill Gross have recently revealed that they use the Kelly Criterion in their investment process. Put simply, the Kelly Criterion or Formula is a way to calculate how much of their assets a Forex trader should risk on any given trade in order to maximize the return. According to a study Schaeffer's Senior Quantitative Analyst Rocky White conducted highlighting the 25 best S&P 500 Index (SPX) stocks in January going back 10 years, Chipotle Mexican Grill stock. So am I correct in assuming the Kelly Criterion is: =0. 's formula described in "A New Interpretation of Information Rate" [1]. Avg win 2300, avg loss 2000. Since there is not a nite number of outcomes of a bet on a security, we must use continuous probability distributions. payout percent 1), you. I am always puzzled about the kelly or other methods. It also leaves the question open as to how one calculates an allocation for a given long call or put. L. It was described by J. , -200 odds and shorter) because the Kelly Calculator struggles with “sure things. It consists of kelly divided by max loss. With that in mind, Edward O. As an example, the next image shows the progression of the equity curve with the same sequence of gains and losses, using 15% and 25% trade sizes in the mentioned coin-toss game. Kelly Betting Expectancy Formula: Trade Calculator: 2. Calculate your probability of winning W. Only then you can calculate geometric mean, which is a comparison value for comparing the profitability of your strategies. , which relates to the long-term growth of capital. so basically Kelly is exactly what I wrote above, and then then exp/log and end up maximizing the mean of the $log(1 + f u)$ in the exponential. Try out the Kelly Criterion Calculator below, but pay careful attention to heavy favorites (i. Two simple components make up the Kelly Criterion, the first is the probability that a trade you make will return positive winnings – and the second is the win/loss ratio. 38% = $53). Kelly Formula is used to calculate optimal capital allocation between different investments and the optimal leverage of a portfolio. From the recent events in the financial market correction, I thought it would be a fun time to talk about risk management. Well, say hello to Kelly’s Criterion! 14. The Kelly Criterion Formula was originally devised in 1956 by John Kelly, and was later adopted by investors and gamblers for stake money management. You lose $100 if the dice shows up as a 4, 5 or 6. 38 percent Kelly bet, or $53 of your current bankroll ($1,220 x 4. And when comes to Kelly, I will admit, it is a continuous process for me, to get to that FINAL approach, which is reliably REPEATABLE. Let’s calculate K for our scenario:Also know as a lay bet calculator. Kelly Criterion Calculator is a tool for finding the optimal investment size to maximize profits on repeated investments. R = Historical Average Win/Loss ratio. Vilhelm Gray over 3 years. 29 Losses using Kelly criterion: 119 X . Kelly is a very aggressive investment strategy. Strategy performance reports, whether applied to historical or live trading results, provide a powerful tool for assisting traders in evaluating their trading systems. It was proposed by John Kelly in the 50’s who at that point was working for AT&T’s Bell Laboratories. The first of these is the probability of a positive outcome, or a winning trade. When you deploy a percentage of your total capital into a trade, you are using the fixed percentage method of position sizing. From video with Daniel Jassy (Spider Crusher):. Kelly Percentage = W – [(1 – W) / R] W - Winning probability; R - Win/loss ratio; With your trading records, you can calculate your winning probability and win/loss ratio easily. Business, Economics, and Finance. In this formula, P is the payoff, W is the probability of winning, and L is the probability of losing. is used to guide an investor to take more risk when investments are winning and cut risk when investments returns is deteriorating. You have an extra $100,000 and are trying to determine the best allocating. The amount won is $200 or multiple of the odds based on the stake. These two factors are then input into the Kelly Criterion equation. Bankroll: This is the total amount of money. That is, he wanted to find (for each market system) an optimal number of contracts or lots, which should be traded with a certain account balance in order to maximise the capital growthKelly's Criterion Bet Size Calculator Here's a spreadsheet to play around with the above equation and calculate optimal bet sizes. Kelly Jr. This is all the information we need in order to use the Kelly formula (p = 40% and r = 3). 4. Kelly Criterion When Trading on a Single Equity. CURRENT BALANCE: Insert your current betting balance BOOKMAKER ODDS: The odds you want to back YOUR ESTIMATE (%): Your estimated probability of the selection winning FRACTIONAL KELLY BETTING (FKB): Choose between 0. These numbers are identical only in the “special case. Notice that, when the assets are not correlated, the optimal result is the same as for a single asset. The more there are, the better. This implies a reward/risk ratio of 0. Whatever method you use it’s important to understand that the Kelly Criterion assumes you continue trading in the same way you have in the past. Figure 9. UEFA Champions League. It can then tell you the optimal amount you should invest in each trade, given the strategy and your personal forex trading record. This results in a negative edge, meaning you will lose money on average every time you place this. Here is some sample code in Python using the backtrader library to implement the Kelly criterion on a strategy: import backtrader as bt. 0003%. 36 – 3,60,000. U = (30% of $10000) / $200 = 15. The Kelly Criterion relies on using bankroll information, odds information and probability to. One thing that complicates the matter is that short term results can vary widely from the long term. How to Use the Kelly Criterion. Calculate your probability of winning W. Many skills of money managements are based on the Kelly criterion, which is a theoretical optimization of bidding an optimal fraction for position sizing. CryptoThe Kelly criterion in Blac kjack, Sports Betting and the Stock Marke t. Kelly Criterion. where “a” and “b” are the amounts. BLACK FRIDAY SPECIAL: Save 70% Off Nial Fuller's Pro Trading Course (Ends Nov 30th) - Learn More Here. Trade Expectancy be positive otherwise your system will. Handicappers can choose from a huge range of tools. Tastytrade has some videos on applying kelly's criterion to options trading. . The approach underlying the calculation takes into account the performance of previous trades. It's free to sign up and bid on jobs. Not actually using full Kelly. 00 returns a total of $300, including the proposed stake. Where . You can read more about how it works in this Kelly Criterion Wikipedia article. Where . Where: f* = fraction of bankroll to bet. 1. This is not an unreasonable number IMHO for a successful trader like. The closer to 1 you get, the better. Winning Probability : Enter the probability of earning a. 0%. The Kelly Criterion is a mathematical formula created by John L. With hand waving and basic math you can also use it to help guide. Kelly and is widely used by traders and gamblers to determine the position size for each trade/bet. The Kelly criterion, a formula used by savvy gamblers and investors alike, is implemented to calculate the optimal. Now that you have W and R, you are ready to calculate Kelly percentage number: Kelly percentage number = 0. With this we can calculate the optimal Kelly leverage via f = μ / σ 2 = 0. To calculate the “R,” divide the average. The Kelly Criterion Model advances unit betting to the next level. Example: if the values of cells A1 and A2 both equal -102 ExchUS2Holds (A1. 16 would guarantee only a very small overall loss. The Kelly criterion is a theoretical formula for obtaining the best return when repeatedly investing money. Figure One: The growth rate (G(f)) of the bankroll for the case p=0. TheThe most popular methodology for determining the optimal wager size is the Kelly Criterion. In its most basic form, the Kelly strat-egy states that one should invest a fraction equal to the ratio of the expected return to the winning return [1]. If you do the research, take the risks and learn from. However, unlike in the previous situation we examined the Kelly Criterion for, there is not a nite number of outcomes of a bet on a security, so, we will useThe Kelly Criterion is straightforward to calculate: you only need two inputs to determine the optimal betting size: The win/loss ratio – the win percentage of your trading strategy (R) (dividing the total gains of the winning trades by the total loss of the losing trades) The win ratio of the trading strategy (W) (the number of trades that. Method 1 Method 2 The calculation of the Kelly criterion includes two main factors: the probability of winning and the win-loss ratio of the trading strategy. We’ve taken our years of industry experience, both from working at sports books and being sports bettors and created Action Backers to help turn you into a more savvy and profitable sports bettor. To be honest I have been successfully using the simple/naïve Kelly Criterion for years and haven’t bothered looking anywhere else. Blog. Kelly applied to Option Investing While stock investments are more free-form, many option investments have common ground with gambles: • fixed terms • a definite time horizon • a payoff settlement at expiration Hence with the proper statistics, we can use the Kelly criterion to determine optimal investment levels whileSimply writing something off is not my style. I'm curious if anyone has. 19 = 141. Kelly, who was a member of a research center at AT&T’s Bells Lab, New Jersey in 1956. I want to use actual trade data to calculate the Kelly %. Optimising profit potential. The Kelly criterion is a money management system that’s used by many professional traders and hedge funds. Euan Sinclair has some great stuff on how we can modify KC in his latest book, positional options trading. The formula is therefore suggesting that 20% of the portfolio be stake 20% of your bankroll. (1923 – 1965) Developed the Kelly Criterion, a formula to proportion bets based on a disparity between given odds and true odds. rr: float, reward to risk. As I mentioned earlier, the formula is a mainstay of the gambling and investing worlds to help manage risk in asset management. The virtues of trading using the Kelly Criterion. One should not commit more than 20% to 25% of the capital into single equity regardless of what the Kelly criterion says, since diversification itself is important and essential to avoid a large loss in the event a stock fails. Revisiting the Kelly Criterion Part 2: Fractional Kelly. Folks in the trading world like to complain about Kelly or Optimum-f being too risky. So basically, in the most general sense, "Kelly" just means use a log-utility when balancing risks. Therefore you can calculate your edge as follows: Edge = (1+1) (47. 48. Calculating the result. Money management strategy based on Kelly J. 05/1 = . Laying the same outcome at 2. We do this by maximizing the median outcome with respect to the size of our bet, ℓ. For example, a $100 stake at 3. By factoring in the odds and the probability of achieving the desired outcome, it can indicate how much you should bet on any given event. e.