Stocks & Investing · How to use
Kelly Criterion & Trading Expectancy
Follow the steps to enter your numbers and check the limits.
Updated 2026-10-25 · ThinkVault Tools
Get started in three steps
- 1
Step 1
Prepare your amounts, terms and applicable rates or prices.
- 2
Step 2
Open the tool, check the units and compare scenarios.
- 3
Step 3
Read the results and notes. Check official documents and sources before deciding.
Method and common questions
Purpose and inputs
Use win rate and payoff ratio to estimate EV, full/half/quarter Kelly and capital allocation.
Method and assumptions
Let p be win probability and b=average win/average loss. EV=p×win−(1−p)×loss; full Kelly=p−(1−p)/b. Multiply by 1, 0.5 or 0.25 and clamp allocation to 0–100%. This is an educational binary-stake risk proxy, not the exact growth-optimal exposure for stocks with partial losses; correlations, gaps and costs are excluded.
FAQ
- What are the limitations?
- Binary-stake Kelly proxy, not exact optimal stock exposure under partial losses; not investment advice.
Method
Let p be win probability and b=average win/average loss. EV=p×win−(1−p)×loss; full Kelly=p−(1−p)/b. Multiply by 1, 0.5 or 0.25 and clamp allocation to 0–100%. This is an educational binary-stake risk proxy, not the exact growth-optimal exposure for stocks with partial losses; correlations, gaps and costs are excluded.
Kelly (1956)Last checked: 2026-10-19