Kelly Criterion Meaning – A Mathematical Formula to Manage Your Bankroll
The Kelly Criterion is a popular betting bankroll management system that minimizes chances for a big loss and offers some good winning opportunities. This strategy follows a simple formula of (bp – q) / b = f.
In this formula, “b” is the multiple of your bet that you can win with the wager, “p” is the winning probability, “q” is the losing probability, and “f” is the solution.
To put this into an example, here’s how to calculate a bet with 3.0 odds, and a 30% winning probability: ((2 x 0.45) – 0.55) / 2 = 0.175. Based on the Kelly Criterion, you should place 0.175 (17%) of your bankroll on this bet.