Kelly Criterion Calculator: Optimal Bet Sizing for Prediction Markets
The mathematically correct way to size your Kalshi and Polymarket trades. Input your edge, get the optimal bet amount — no guesswork, no emotions, just the math that professional gamblers and quant traders have used for decades.
The Problem
You found an edge — the market price is 45¢ but your model says the true probability is 55%. How much should you bet?
Guess too high and a bad streak wipes you out. Guess too low and you leave money on the table. Most traders use fixed amounts or gut feeling — both are mathematically suboptimal.
The Solution
The Kelly Criterion is the mathematically proven formula for optimal bet sizing. It maximizes your long-term growth rate by allocating more capital when your edge is larger — and less when it is thin.
This calculator was built specifically for prediction markets. Binary YES/NO contracts. Prices in cents. Edge as percentage points. No stock-market assumptions awkwardly adapted.
What's Inside
🧮 Kelly Criterion Calculator
Input the market price (1-99¢), your estimated probability (0-100%), and your bankroll. The sheet outputs your optimal bet in dollars and number of contracts. Supports fractional Kelly: full, 1/2, 1/4, or 1/8.
📈 Edge Visualizer
See at a glance whether your trade is justified. Green (edge >5%) = trade. Yellow (2-5%) = borderline. Red (<2%) = sit out. Removes emotional decision-making.
⚠️ Risk Warnings
If the Kelly formula suggests betting more than 25% of your bankroll, the sheet warns you. Above 50%, it blocks with a clear warning. These are guardrails, not suggestions.
✅ YES/NO Auto-Detection
The sheet automatically detects whether you should buy YES or NO based on your probability estimate vs the market price. No manual side selection required.
📋 Trade Log Sheet
Log every trade with automatic Kelly calculation. Track cumulative P&L. Compare your actual bet sizes to the Kelly-optimal amounts. See if your edge estimates match reality.
📚 Instructions Sheet
Clear, jargon-free explanations: what the Kelly Criterion is, why fractional Kelly is safer, how to estimate your true probability, and when to ignore the formula entirely.
"The Kelly Criterion is the single most important concept in position sizing — and the one most retail traders ignore. A good strategy with bad sizing is still a losing strategy. This calculator fixes that."
— EdgeOutcome Team
How the Formula Works
Kelly Formula for binary markets:
f* = (bp − q) / b
Where: p = your estimated win probability, q = 1 − p (loss probability), b = net odds = (1 / market_price) − 1
Example: Market price is 45¢ → implied probability = 45%. You estimate true probability = 55%.
Edge = 55% − 45% = 10 percentage points. Kelly says bet 32.3% of bankroll. At 1/4 Kelly: 8.1% of bankroll. On a $1,000 bankroll: $81 or 81 contracts.
Frequently Asked Questions
What is the Kelly Criterion calculator?
A Google Sheets template that calculates optimal bet sizes for binary prediction market trades using the Kelly Criterion. It is built specifically for Kalshi and Polymarket YES/NO contracts.
Do I need to understand the math?
No. You only need to input three numbers: market price, your probability estimate, and your bankroll. The sheet does all calculations. An instructions tab explains the concepts if you want to understand the logic.
Why fractional Kelly instead of full Kelly?
Full Kelly assumes you know your true edge with certainty — which is never the case in prediction markets. Fractional Kelly (especially 1/4) reduces volatility by 75% while still capturing most of the growth benefit. It is the standard among professional bettors and quant funds.
What software do I need?
Only a free Google account (gmail.com). The template is a Google Sheets file — copy it to your account and all 18 formulas work immediately. No Excel required.
Can I customize the calculator?
Yes. It is a standard Google Sheets file. Add columns, modify the Kelly fraction, add your own strategies, or integrate external data. The formulas are visible and editable.
When should I NOT use the Kelly Criterion?
Kelly assumes you can estimate probabilities accurately. If you are trading based on gut feeling with no edge estimate, the formula will give you false confidence. The instructions sheet covers when to override Kelly — or skip it entirely.
Stop Guessing Your Bet Sizes
The Kelly Criterion is not a suggestion — it is the mathematically optimal solution. This calculator makes it practical for prediction market traders.
Get the Calculator — $7Google Sheets template. Free lifetime updates.