This positive expected result is due to the indifferent size in the odds. However, this form of answer that is 0.8 shows that the wager has a positive expected result.
We’ll be experimenting with the Kelly criterion formula for a practical example.Īssuming the anticipated wager has odds of 3.00, with a winning probability of 0.6, and its probability of losing is 0.4.įollowing this formula, it’s calculated that you stake 80% of your bankroll on the proposed bet. It gives you a calculated fraction of your bankroll to stake on the proposed wager. It is the value of the total answer the formula will equate. it can also be calculated as one minus p. For example: taking the previous model with a 60% chance of winning has a 40% chance of losing, making its probability of losing 0.4. This variable is the probability of the anticipated wager winning. For example, a wager with a 60% chance of being successful has a 0.6 winning probability. It is the probability of the anticipated wager winning.
The amount won is $200 or multiple of the odds based on the stake. For example, a $100 stake at 3.00 returns a total of $300, including the proposed stake. Using decimals, b implies the odds minus 1. This is the multiple of your stake you can win from the anticipated wager.
