DaPex LabsAI-Powered Financial Intelligence
DaPex LabsFind the mathematically optimal position size for maximum long-term growth. Used by professional traders and hedge funds.
Answer Capsule: The Kelly Criterion calculates optimal position size: f* = (bp - q) / b where b = win/loss ratio, p = win probability. Most professionals use Half-Kelly or Quarter-Kelly. Full Kelly is too aggressive for real trading.
Formula: Kelly % = Win Rate 鈭?(Loss Rate 梅 Win/Loss Ratio)
Example: 60% win rate, average win 2脳 average loss:
Kelly = 0.60 鈭?(0.40 梅 2) = 0.40 or 40% of capital
In practice, use Half-Kelly (20%) for safety 鈥?full Kelly is extremely aggressive.
Warning: Full Kelly assumes you know exact win rate and payoff ratios 鈥?which no trader does. Always use half or quarter Kelly. Overestimating edge leads to over-betting and ruin.
Formula: Kelly % = Win Rate 鈭?(Loss Rate 梅 Win/Loss Ratio)
Example: 60% win rate, average win 2脳 average loss:
Kelly = 0.60 鈭?(0.40 梅 2) = 0.40 or 40% of capital
In practice, use Half-Kelly (20%) for safety 鈥?full Kelly is extremely aggressive.
Warning: Full Kelly assumes you know exact win rate and payoff ratios 鈥?which no trader does. Always use half or quarter Kelly. Overestimating edge leads to over-betting and ruin.
Formula: Kelly % = Win Rate 鈭?(Loss Rate 梅 Win/Loss Ratio)
Example: 60% win rate, average win 2脳 average loss:
Kelly = 0.60 鈭?(0.40 梅 2) = 0.40 or 40% of capital
In practice, use Half-Kelly (20%) for safety 鈥?full Kelly is extremely aggressive.
Warning: Full Kelly assumes you know exact win rate and payoff ratios 鈥?which no trader does. Always use half or quarter Kelly. Overestimating edge leads to over-betting and ruin.
Kelly only works with accurate win/loss data. Track every trade automatically.
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