The Kelly Criterion is an effective strategy long-term bettors use in various forms of gambling.
It is a strategy for gambling in several forms of betting, including sports betting, lay betting, and so on.
This betting trick also serves as an opportunity to invest. It also works for investing. As its principal function is to balance reward and risk while reducing volatility.
This strategy is of great help to even follow stock prices as well as gambling.
In a sports setting, it helps by maximizing potential returns on bets and reducing the chances of being on a losing streak.
These two significant goals being the main betting objective is what Kelly Criterion Betting System entails. Try employing this betting system to join the winning set of gamblers.
Despite the high chances of winning this system, many bettors still argue about how inefficient it is. This article will provide every detail of the Kelly betting system and how it helps gamblers.
Read on and see how you can benefit from this strategy.
We’ll get Kelly criterion explained with every detail possible.
What is the Kelly Betting System?
The Kelly Criterion is essentially a mathematical formula that allows you to determine the amount of money you should gamble.
It provides calculated results on the total amount of money expected for use and potential gain on an opportunity. It calculates and provides accurate results on the amount you should be staking on any bet.
With a simple formula, which we’ll explain as you go further, which gives reasonable regard to your betting bankroll.
It works by calculating the correct amount of money for you to risk relative to the size of your bankroll.
For successful use of this formula, the player must include the anticipated chance of a bet winning.
However, the main objective of the strategy occurs in two different directions.
It ensures that punters should wager stakes with a higher probability of winning with higher amounts.
In opposition, bettors should also wager stakes with lower chances of winning with lesser amounts. Pragmatically, it makes sure your returns are more elevated, and losses are lower on every stake.
Gambling is a game of probability, which involves so many different factors. The use of the Kelly staking plan gets complex as it doesn’t work unless the player gives probabilities with a high level of accuracy.
This strategy requires skill; that’s why most bettors without the knowledge lose while gambling.
To be able to wield this powerful strategy, you need to learn the required math.
But, before that, it’s crucial you assign probabilities on your bets to some certain level of accuracy.
Kelly Criterion Formula
To successfully use the Kelly Criterion to gamble, you have to use the formula for every bet.
Looking at the formula above, there’s no clear interpretation of the variables.
Here is a table explaining each component and how it works.
|b||This is the multiple of your stake you can win from the anticipated wager. Using decimals, b implies the odds minus 1. For example, a $100 stake at 3.00 returns a total of $300, including the proposed stake. The amount won is $200 or multiple of the odds based on the stake.|
|p||It 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.|
|q||This variable is the probability of the anticipated wager winning. 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. it can also be calculated as one minus p.|
|f||It is the value of the total answer the formula will equate. It gives you a calculated fraction of your bankroll to stake on the proposed wager.|
We’ll be experimenting with the Kelly criterion formula for a practical example.
Assuming the anticipated wager has odds of 3.00, with a winning probability of 0.6, and its probability of losing is 0.4.
Following this formula, it’s calculated that you stake 80% of your bankroll on the proposed bet.
However, this form of answer that is 0.8 shows that the wager has a positive expected result. This positive expected result is due to the indifferent size in the odds.
If the calculated “f” gives a negative value, it implies the bettor doesn’t have a positive expected result.
This betting case indicates a low chance of success because the odds aren’t high enough for you to risk your bankroll.
How Does the Kelly betting System Work?
To use the Kelly Criterion strategy, you need more understanding of the way it works. As we have seen that it involves a little bit of math knowledge, it is a simple strategy.
The formula explains only the math aspect of this system. It entails more than the formula in it.
Let’s assume your bet has a 60% chance of winning and a 40% chance of losing. Using the Kelly formula, you’ll get the value of the size of your bankroll you should risk.
It is a formulaic system that works best for sports betting, sports trading, casino and other betting forms.
Your final value tells you how much of your bankroll you should risk by applying the formula accurately.
Kelly Criterion Football
As betting advances over the years, many football lovers find different ways to increase their winnings.
That is why many gamblers research different betting strategies to find a more lucrative one. As it turns out, the Kelly Criterion sports betting stands out as one of the most lucrative methods.
It helps football punters play the game with calculated risk relative to their bankroll.
However, the most important thing about this football betting strategy is how it helps deliver higher profit.
When compared with other options out there, the Kelly Criterion is the right system for sports betting in general.
Kelly Criterion Lay betting
When you lay a bet, another gambler’s wager will be for you if the result doesn’t occur.
Otherwise, you will have to pay the punter at the proposed odds if the outcome occurs.
As stated earlier, if p is still the probability of winning, you will win the bet if the event doesn’t happen and lose the chance if it does occur.
Advantages of Using the Kelly System
With over a hundred strategies available in the gaming industry, Kelly betting System stands out as one of the best. Here are the pros of the Kelly Criterion and its application.
- It’s a straightforward way to decide how much in your bankroll you should wager.
- It takes into consideration the size of your bankroll and gives calculated risk per trade.
- It enables gamblers to get the right balance between increasing their betting income and protecting their bankroll. By allowing bettors to stake more when the theoretical value is high and stake less when the theoretical value is low.
- It is the best staking plan for low odds.
- The strategy prevents bettors from placing wagers where positive expected values don’t exist. As stated earlier, if the value of “f” turns out to be negative, there is no point in gambling. It tells when the probability of winning is lower than the probability of losing.
Risk of Using the Kelly Criterion
No matter how effective a betting system can be,
it’ll always have flaws, thereby imposing risk on bettors.
Here are two cons of the Kelly Criterion strategy.
- It requires a lot of skill. One including the know-how of accurately working out the probability of the anticipated wager. If the calculations are incorrect, you might be staking the wrong amount, thereby imposing risk on your bankroll.
- The second disadvantage of the strategy is how we can consider it potentially aggressive. In the example we used earlier, the formula inquired staking an amount equal to 80% of your bankroll. Which is a very high percentage you should risk. Most bettors or investors even consider over 5% too much to be staked on a bet.
Tips and Tricks for Using the Kelly Betting System
- Know your betting limits. If the final value gives a negative result, the Kelly criterion suggests you should not take such a bet.
- Try combining other betting strategies with it. You can easily combine it with the Martingale system or the Fibonacci Betting System.
- Make more research on the system and see how well it works.
- Employ the use of a calculator if the maths are looking difficult.
- Keep your greed in check. To attain a reasonable progression, try to keep your greed while gambling.
- Avoid emotions while betting with the Kelly betting strategy.
- Most importantly, give or acquire a reasonable probability of an event before wagering.
Gambling is a game of probability and luck. It doesn’t guarantee a 100% winning streak. The mindset most losing gamblers hold is how they can win all the time.
In reality, winning is not always guaranteed while gambling.
However, there are still some gamblers who follow specific strategies and are successful in their gambling endeavors.
One primary strategy this successful set of bettors use is the Kelly Criterion System. As explained, it is a formulaic system that gives bettors the amount of money they should wager on an opportunity.
Some football lovers confirmed that the betting method is one of the most effective for calculating the amount of risk per trade. While some bettors also consider it useless.
In addition, the fact that big gamblers use the Kelly Criterion strategy doesn’t guarantee 100% success.
With subsequent practice and focus on the system, it might turn out to be helpful.
Which in turn can guarantee growth in your betting endeavors and income.