Kelly Criterion Calculator
Work out the Kelly fraction for your win rate and payoff, and see half and quarter Kelly.
Calculate Kelly FractionThe Kelly criterion is a formula from probability theory for the share of your capital to stake on a repeated bet with a known edge, in order to maximize long-run growth. For trading it takes two inputs: your win rate and your payoff ratio, which is the average win divided by the average loss. If the numbers show no edge, it says to stake nothing.
The formula is the win rate minus the loss rate divided by the payoff ratio. With a 45% win rate and a payoff of 2, it gives about 17.5% of your capital. That figure is far larger than most traders risk, and it should be. Kelly assumes your win rate and payoff are exactly right, and that you are prepared to accept deep drawdowns in return for maximum growth. Neither assumption holds in practice.
In practice, traders who use Kelly at all usually use a fraction of it, such as half or a quarter, which cuts the swings sharply while keeping a good part of the growth. And since your inputs are estimates from a limited history, overestimating your edge makes full Kelly oversized. Treat the output as an upper bound to think about, not a target.
A better use of Kelly is as a sanity check: if the formula says zero or a small figure, your edge is thin, and any large risk per trade is hard to justify. To see what different sizes do to the chance of a deep drawdown, use the risk of ruin calculator.
Full Kelly fraction
17.50%
Half Kelly
8.75%
Quarter Kelly
4.38%
The Kelly formula gives the share of your balance that maximizes long-run growth if your win rate and payoff are exactly right. They never are, and full Kelly produces large drawdowns, so many traders use a fraction of it. This is arithmetic, not advice.
A calculator uses numbers you type in. To see what your own trades actually show, upload your trade history.
Analyze my tradesHow it is calculated
The formula
Kelly fraction = win rate − (loss rate ÷ payoff ratio), where the payoff ratio is average win divided by average loss.
No edge, no stake
If the result is zero or negative, your win rate and payoff together lose money on average, and the formula says to risk nothing.
Fractional Kelly
Half or quarter Kelly reduces the swings considerably. It is a common compromise because the inputs are always uncertain.
The catch
It needs your true win rate and payoff, and you only ever have estimates. See how many trades you need before trusting them.
Frequently asked questions
Should I risk the full Kelly fraction?
Most traders do not. Full Kelly maximizes growth only if your inputs are exact and brings large drawdowns even then. A fraction of it gives up some growth for far smoother results, which suits how people actually experience losses.
What if the result is negative?
It means your win rate and payoff produce a negative average result per trade, so there is no edge to size. The calculator shows zero. The first problem to solve is the strategy, not the stake.
Is the Kelly fraction the same as risk per trade?
Not exactly. The formula's fraction is the share of capital wagered on a bet that can be lost entirely. In trading, the amount at risk is the distance to your stop, so the usual way to apply it is to treat the fraction as an upper bound on the risk per trade.
Is this financial advice?
No. It is arithmetic on numbers you provide. It does not account for your circumstances, costs, or the uncertainty in your inputs.
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Holdy Lab content is educational and is not financial advice. Results describe the data you provide; they do not predict future results.