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Kelly Criterion Calculator

Optimal position size for prediction market trades — based on your probability estimate and the market odds. ¼ Kelly as the conservative default.

Your estimate that the event resolves YES.

2.00 = fair coin. Polymarket price 0.50 → odds 2.00. General: odds = 1 / price.

If set, the concrete stake is calculated. Currency is up to you — figures are formatted as EUR.

Kelly fraction

How it works

The Kelly formula returns the stake fraction that maximises your geometric growth rate — assuming your probability estimate is correct:

f* = (p × b − q) / b

With p = your estimated probability, q = 1 − p = complement, b = decimal odds − 1 = net payout per unit staked. The result f* is the fraction of your bankroll to bet.

Why ¼ Kelly as default

Full Kelly only works if your estimate is exactly right. In practice it never is. A 5pp overestimate of your probability translates into severe drawdown at full Kelly. ¼ Kelly retains roughly 50 % of the growth rate while reducing variance to a quarter — the established trade-off for realistic estimates.

Negative edge → no trade

When the calculator shows „No bet", your estimated probability is below what the odds imply. Implied probability = 1 / decimal odds. At odds of 2.00 that's 50 %. If you estimate 45 %, you have no edge — the other side does.

Where the calculator gets blunt

The formula ignores: platform fees (use the EV Calculator for those), liquidity (you don't always get the displayed price filled), correlation between trades (a portfolio of 10 highly correlated trades doesn't behave like 10 independent ones), and minimum stakes. For isolated single trades Kelly is enough — for portfolio sizing you need more.

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FAQ

Why ¼ Kelly instead of full Kelly?
Full Kelly assumes your probability estimate is exactly correct — which it never is. ¼ Kelly delivers roughly 50 % of the growth rate at only 25 % of the variance. It's the professional standard for handling estimation uncertainty.
What if the edge is negative?
If edge is negative, Kelly says: don't bet. A negative recommended fraction means betting the other side would be profitable — but only if the other side is available at comparable odds. Default: no trade.
How do I convert American odds to decimal?
Positive (e.g. +150): decimal = (american / 100) + 1 → 2.50. Negative (e.g. −200): decimal = (100 / |american|) + 1 → 1.50.
What about platform fees?
Polymarket charges 0.10 % on resolution, Kalshi varies. For Kelly you subtract the fee from expected payout — at small edges this can flip the trade. For pure edge sizing, fees on prediction markets are usually negligible; the EV Calculator accounts for them explicitly.
Are my inputs stored?
No. The calculator runs entirely in the browser — no server, no tracking. Reload the page and all values are gone.