View Full Version : Kelly Staking System - Simple Explanation?

Louis

05-09-2011, 08:43 PM

I keep hearing about something called the 'Kelly Staking System' - apparently this helps you manage your bet stakes for better returns. I've had a look at the wiki page and had a look at a few other explanations, but they all seem pretty high-browed and quote various mathematical formula. Can anyone explain it in SIMPLE terms - or point to a source that does this? ;)

Flat Noodle

06-09-2011, 02:24 AM

Try this link:

http://www.sbrforum.com/betting-tools/kelly-calculator/

BW_Palace

07-09-2011, 02:34 AM

Just put it into a spreadsheet. Not sure what you're expecting if not mathematical formulae really! The wiki page explains it pretty plainly...

http://upload.wikimedia.org/math/9/5/6/9563314847f2d9ccaf6e4dff6cf6672a.png

where:

f* is the fraction of the current bankroll to wager [i.e. your stake is bankroll*f];

b is the net odds received on the wager ("b to 1"); that is, you could win $b (plus the $1 wagered) for a $1 bet

p is the probability of winning;

q is the probability of losing, which is 1 − p.

p is the value that YOU make the bet, so if you make something evens, p=0.5 and q=0.5. tbh, if that's not understandable, then Kelly is utterly irrelevant anyway as your expected returns are gonna be <0.

It doesn't give you better returns, it maximises your bank growth rate whilst minimising risk of ruin (i.e. busto) - assuming you have a positive expected return, you'll just lose money quicker.

Louis

07-09-2011, 12:00 PM

Just put it into a spreadsheet. Not sure what you're expecting if not mathematical formulae really! The wiki page explains it pretty plainly...

p is the value that YOU make the bet, so if you make something evens, p=0.5 and q=0.5. tbh, if that's not understandable, then Kelly is utterly irrelevant anyway as your expected returns are gonna be <0.

It doesn't give you better returns, it maximises your bank growth rate whilst minimising risk of ruin (i.e. busto) - assuming you have a positive expected return, you'll just lose money quicker.

Thanks BW :p

Louis

07-09-2011, 12:01 PM

This site has the simplest explanation I've found so far -

http://www.racetips.co.uk/articles/bankroll-management-3

(I'm going to keep looking for others)

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