Kelly Criterion Calculator
Calculate optimal position sizes for Polymarket, Kalshi, and other prediction markets
Your estimated probability of winning
Current market probability on Polymarket, Kalshi, etc.
Your total available capital for trading
Conservative: 25% | Moderate: 50% | Full Kelly: 100%
Recommended Bet Size
💡 Recommendation: Enter your probabilities to see recommendations
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What is the Kelly Criterion?
The Kelly Criterion is a mathematical formula that helps you determine the optimal size of a bet or trade, maximizing long-term growth while minimizing the risk of ruin. It's particularly valuable for prediction market traders on platforms like Polymarket, Kalshi, PredictIt, and Augur.
Kelly Formula
p = Your win probability
b = Odds received on the bet (decimal odds - 1)
Example: If Polymarket shows 50¢ (50% probability), buying "Yes" at that price gives you 2.0 decimal odds, so b = 1.0
Using Kelly on Prediction Markets
Polymarket & Kalshi
Binary markets show probabilities directly (e.g., 65¢). If you think the true probability is higher, Kelly helps you size your position optimally without over-betting.
Finding Edge
Your "edge" is the difference between your estimated probability and the market's. Kelly only recommends betting when you have a positive edge. No edge = no bet.
Fractional Kelly
Full Kelly can be aggressive. Most traders use 25-50% Kelly (fractional Kelly) to reduce volatility while still growing their bankroll optimally.
Risk Management
Kelly prevents you from over-betting on any single market, protecting your capital from catastrophic losses even when you're wrong.
Best Practices
📈 Start Conservative
Use 25% Kelly (quarter Kelly) when starting out. This gives you 75% of the optimal growth with much less volatility. As you gain confidence in your edge estimation, you can increase to 50% Kelly.
🎲 Honest Probability Assessment
Kelly only works if your probability estimates are accurate. Don't fool yourself—if you're not sure you have an edge, the market price is probably more accurate than your guess.
💰 Update Your Bankroll
Recalculate your bet sizes as your bankroll changes. If you're up, you can bet more. If you're down, Kelly automatically reduces your position sizes to protect your remaining capital.
⚠️ Account for Fees
Remember that prediction markets charge fees (typically 2-5% on profits). Factor this into your edge calculation. A market at 50¢ with 2% fees means you need break-even at 51¢, not 50¢.
Popular Prediction Markets
Polymarket
The largest crypto-based prediction market. Trade on politics, sports, crypto, and more with USDC. No trading fees, but there's a 2% fee on profits when cashing out.
View Polymarket Telegram Bots →Kalshi
CFTC-regulated prediction market based in the US. Trade on events with real money. Offers markets on economics, politics, weather, and more. Subject to US regulations.
PredictIt
US-based political prediction market operated for research purposes. $850 limit per market. 10% fee on profits and 5% withdrawal fee. Great for political events.
Augur & Manifold
Decentralized prediction markets. Augur runs on Ethereum with complete decentralization. Manifold uses play money but offers a fun way to practice prediction market trading.