Kelly formula trading is a disciplined strategy for sizing positions based on your edge and the odds.

Kelly formula trading is a disciplined strategy for sizing positions based on your edge and the odds. Originating from the Kelly Criterion, it tells you what fraction of capital to risk on each trade to maximize long-term growth while controlling drawdowns. By combining win rate, payoff ratio, and risk, the Kelly approach helps traders avoid overbetting during hot streaks and underbetting when the edge is strong. Used correctly - often with fractional Kelly for smoother equity curves - it becomes a practical money management framework across stocks, futures, forex, and crypto. On this page, you will learn how the Kelly formula works, when to apply it, and how to adapt it to real-world uncertainty, slippage, and changing market regimes. Whether you backtest systems or trade discretionarily, kelly formula trading can align your position sizing with statistical advantage, reduce risk of ruin, and bring consistency to your plan. Explore examples, calculators, and best practices to turn probability into position size and let compounding work in your favor.

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