Glossary · Staking
Fractional Kelly
Staking a fixed fraction (e.g. 0.5×) of full Kelly to reduce variance.
Full Kelly is theoretically optimal but assumes you know the true probability exactly. In reality, your model probability is an estimate. Overstating your edge by even a small amount and staking full Kelly can blow up the bankroll.
Half-Kelly (0.5×) captures roughly 75% of the long-run growth of full Kelly with about a quarter of the volatility. Quarter-Kelly is even more conservative. Most serious bettors and DomVs default to half-Kelly.
Formula
stake = bankroll · f* · k k = 0.5 → half-Kelly k = 0.25 → quarter-Kelly
Related
- Kelly Criterion— The mathematically optimal stake size given your edge and the odds — maximises long-run bankroll growth.
- Variance— The natural swings around your true expected value. Bigger edges have smaller swings; longshots have huge ones.
- Drawdown— The peak-to-trough decline in bankroll during a losing run.