What is the Kelly Criterion?
Developed by John L. Kelly Jr., this formula determines the optimal stake size based on edge and bankroll to maximize growth while minimizing risk.
Formula:
f∗=bbp−q
- f∗= fraction of bankroll to bet
- b= decimal odds – 1
- p= probability of winning
- q= probability of losing (1 – p)
Example:
- Odds: 2.50 (b = 1.5)
- Estimated win probability: 55% (p = 0.55, q = 0.45)
- Calculation: f^* = \frac{(1.5 \times 0.55) – 0.45}{1.5} = 0.15 \text{ (15% of bankroll)}
Pros & Cons:
✅ Minimizes risk of ruin while maximizing growth.
❌ Overestimating edge can lead to heavy losses.
Final Thoughts
Both strategies require discipline and data analysis. Value betting works best for long-term profitability, while the Kelly Criterion helps manage risk effectively. Combining them can lead to a powerful betting approach in 2024.
Would you like a deeper dive into any specific strategy? 🚀
