The
Kelly Optimization Model, often called the optimal growth strategy, is based on
the concept that if you know the probability of success, you bet the fraction
of your bankroll that maximizes the growth rate. It is expressed as a formula:
2p – 1 = x
where 2
times the probability of winning (p) minus 1 equals the percentage of the total
that should be bet (x). For example, if
the probability of beating the house is 55 percent, you should bet 10 percent
of your bankroll to achieve the maximum growth of your winnings.
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