Kelly Calculator: Common Mistakes

🛠️ Tools & Features

The Kelly Criterion is powerful but easy to misuse. Here are the most common mistakes and how to avoid them.

Mistake 1: Using Full Kelly

Full Kelly says: Bet 8% of bankroll ($400 on a $5,000 bankroll)

Problem: If your edge estimate is even slightly off,

Full Kelly leads to massive drawdowns.

Fix: Use Quarter Kelly ($100 instead of $400).

You sacrifice some growth but dramatically reduce variance.

Mistake 2: Overestimating Your Edge

The Kelly formula is only as good as your edge estimate. If you think the edge is 5% but it's really 2%, you'll overbet by 2.5x.

⚠️ Our model provides edge estimates, not certainties. The market is efficient most of the time. Always assume the true edge is smaller than what's displayed, and use Quarter or Half Kelly accordingly.

Mistake 3: Not Adjusting for Multiple Bets

If you bet on 5 games in one day using Kelly on each, your total exposure might be 15-20% of bankroll. That's way too much.

Better approach:

• Divide your daily Kelly budget: if max exposure is 5% of bankroll/day,

split that across your bets

• Or simply cap total daily action at 5% of bankroll regardless of

individual Kelly recommendations

Mistake 4: Ignoring Bankroll Updates

Kelly is based on your CURRENT bankroll. If you won $500 yesterday, today's Kelly should be based on the new higher bankroll. If you lost $500, use the lower number.

Set your bankroll in Account settings and update it weekly. The Kelly Calculator auto-adjusts all recommendations to your current number. See Kelly Criterion Calculator for the basics.

Kelly Calculator: Common Mistakes

Mistake 1: Using Full Kelly

Mistake 2: Overestimating Your Edge

Mistake 3: Not Adjusting for Multiple Bets

Mistake 4: Ignoring Bankroll Updates

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