Kelly Calculator for Determining the Optimal Trade Size
Determine the optimal capital allocation for each trade based on the Kelly criterion
What is the Kelly criterion?
A mathematical formula for calculating the optimal trade size to reduce risk and maximize long-term growth
The basic formula:
$f_ = (p \times b - q) / b$
where:
- p = Win Probability
- q = Loss Probability = 1 - p
- b = Win/Loss Ratio
- f_ = Recommended capital fraction for the trade
Alternative formula for returns:
$f_ = p - (1 - p) / b$
The result expresses a percentage of your total trading capital
Calculation example:
- Win probability p = 55%
- Loss probability q = 45%
- Win/Loss ratio b = 2.0
- $f_ = (0.55 \times 2 - 0.45) / 2 = (1.10 - 0.45) / 2 = 0.65 / 2 = 0.325$
- Result: 32.5% of capital ★
Quick calculator:
- Enter win probability p: 60%
- Enter win/loss ratio: 1.5
- Optimal trade size (Kelly %): ≈ 26.7%
Important warnings:
⚠️ Important tip: Use 1/2 or 1/4 Kelly to reduce risk (meaning if it comes out 26%, enter with only 13% or 6.5%)
🛡️ Risk management: Do not exceed the full Kelly fraction due to market volatility
✅ Remember: The criterion works only with accurate data - you need at least 100 previous trades
$STRK
$CHIP
#BTC☀ #bnb
#حاسبة_كيللي #BinanceSquareFamily #ادارة_رأس_المال
Determine the optimal capital allocation for each trade based on the Kelly criterion
What is the Kelly criterion?
A mathematical formula for calculating the optimal trade size to reduce risk and maximize long-term growth
The basic formula:
$f_ = (p \times b - q) / b$
where:
- p = Win Probability
- q = Loss Probability = 1 - p
- b = Win/Loss Ratio
- f_ = Recommended capital fraction for the trade
Alternative formula for returns:
$f_ = p - (1 - p) / b$
The result expresses a percentage of your total trading capital
Calculation example:
- Win probability p = 55%
- Loss probability q = 45%
- Win/Loss ratio b = 2.0
- $f_ = (0.55 \times 2 - 0.45) / 2 = (1.10 - 0.45) / 2 = 0.65 / 2 = 0.325$
- Result: 32.5% of capital ★
Quick calculator:
- Enter win probability p: 60%
- Enter win/loss ratio: 1.5
- Optimal trade size (Kelly %): ≈ 26.7%
Important warnings:
⚠️ Important tip: Use 1/2 or 1/4 Kelly to reduce risk (meaning if it comes out 26%, enter with only 13% or 6.5%)
🛡️ Risk management: Do not exceed the full Kelly fraction due to market volatility
✅ Remember: The criterion works only with accurate data - you need at least 100 previous trades
$STRK
$CHIP
#BTC☀ #bnb
#حاسبة_كيللي #BinanceSquareFamily #ادارة_رأس_المال