SIMULATION
Portfolio
€10,000
Round
0 / 5
vs Kelly
—
The Kelly Criterion

Mathematics knows
exactly how much
you should bet.

In 1956, physicist John Kelly derived a formula that tells you the mathematically optimal percentage of your portfolio to put on any investment — given the probability of winning and the potential payoff.

Almost no one uses it. Almost everyone bets too much — or too little. And the cost of getting it wrong, even slightly, compounds into enormous underperformance over time.

Five rounds. Each round you'll see a bet with known odds. You decide what percentage of your portfolio to stake. Then we show you what Kelly would have said — and what the difference cost you.

There are no tricks. The odds are real. The formula is real. The only question is: do you trust mathematics more than your instinct?

THE KELLY FORMULA

f* = (bp - q) / b

f* = optimal fraction of portfolio
b = net odds (what you win per €1)
p = probability of winning
q = probability of losing (1-p)
WIN PROBABILITY
PAYOFF IF WIN
LOSS PROBABILITY
LOSS IF LOSE
HOW MUCH DO YOU BET? (% of portfolio)
10%
= €1,000
1% 25% 50% 75% 100%
YOUR BET
10%
KELLY OPTIMAL
?

Kelly's answer revealed after you confirm.

YOUR BET vs. KELLY CRITERION
You bet
Kelly optimal
Your result
Kelly result would have been
Difference this round
What this reveals
Simulation complete

Your Portfolio
Kelly Portfolio
Difference
Your betting pattern
THE KEY INSIGHT
The Kelly Criterion — John L. Kelly Jr., 1956
Kelly, a physicist at Bell Labs, derived his formula to maximise the long-term growth rate of a bankroll. The key insight: overbetting is more dangerous than underbetting. Betting twice the Kelly amount reduces your long-term growth rate to zero — even with a positive expected value. Betting three times Kelly makes ruin inevitable. This is why Warren Buffett, Ed Thorp, and Renaissance Technologies all use Kelly-based position sizing. The formula doesn't just maximise returns — it prevents the catastrophic losses that destroy compounding. Most retail investors bet 3-5x Kelly without knowing it.

This simulation reveals your position sizing instinct. The full Lostfolio experience — five simulations plus a personal analysis — reveals your complete pattern as an investor.

Discover your full pattern — €97 €97 — once — no subscription