Find the mathematically optimal fraction of your bankroll to allocate — for prediction markets and crypto trading.
Stake 12.4% of your bankroll (Half Kelly). Your edge is 10.1% per trade.
The Kelly Criterion, developed by Bell Labs researcher John L. Kelly Jr. in 1956, is a mathematical formula used to determine the optimal size of a series of bets or investments that maximizes the expected logarithm of wealth — effectively maximizing long-term growth while minimizing the risk of going bankrupt.
In prediction markets like Polymarket, knowing how much to stake is just as important as knowing which outcome is mispriced. Even traders with genuine edge lose money in the long run if they over-bet and encounter a losing streak.
Full Kelly assumes your probability estimate is precisely correct. In practice, estimating the true probability of a real-world event is uncertain. Using half or quarter Kelly reduces variance by roughly 50–75% while only sacrificing a small amount of expected growth rate.
The Kelly formula applies equally to leveraged crypto trades when you can estimate your win rate and average reward-to-risk ratio. If your strategy wins 55% of the time with a 1.5:1 reward/risk, your Kelly fraction is:
The Daily Edge scanner shows today's highest AI-estimated probability gaps — pre-calculated Kelly inputs for every market on the list.