Kelly Method for Placing bets

[Omm]

As i have found that i have got more time on my hands and really enjoy sports betting i have started to be a bit more disciplined with

a) the bets i place
b) how much of my bankroll i use on a particular bet

As a lot of people on here do i follow the TFT thread, however i do not always follow the exact pound note recommend and i will only invest what i have felt is suitable for my bankroll. On the back of this i have started to research different ways of following bankroll management and bet sizing to make sure i am making the most out of the bets i place.

This leads me to asking about the Kelly method, it seems to me that there are various variations of the method with the fractional Kelly seeming to be the most prudent for ensuring you do not bust your bankroll whilst the full Kelly could make you rich or skint within a couple of bets. I just wanted to throw this open for some advice from those of you that have been doing this for years and what you have found to be effective and maybe share what you use.

I have downloaded a Kelly calculator and i am running a dummy spreadsheet for a month to see what my results would be alongside my current way of working. One of the main aspects of this is the

"Your estimate of your Probability of Winning:" section where i have to put in as a percentage what i feel is the chance of the bet winning, it does say use a low estimate, but how do i know what the estimate should be in the first place?

Look forward to hearing some opinions and getting some advice on this.

[tikay]

Hi Omm,

Several of the guys on Fred are au fait with Kelly Criterion, in particular (to my certain knowledge, but I'm sure there are others) redarmi & doubleup. Both are very helpful in such matters.

For those not sure what this is all about, see.....


http://en.wikipedia.org/wiki/Gambling_and_information_theory


....which was formulated, of course, by Mr Kelly......


http://en.wikipedia.org/wiki/John_Larry_Kelly,_Jr

[doubleup]

I use a 5% ROI ie £1.05 returned for every £1 bet - unless I feel that I'm sure that the bet is better than that. 

The Kelly "system" is designed to maximise bankroll growth but over-staking is more detrimental than under-staking, so being conservative is best.

You can convert the ROI into a percentage win quite simply

If your ROI is 5%, just divide 1.05 by the decimal odds of your bet and multiply by 100, e.g. :

3-1 = decimal odds of 4, so 1.05/4x100 = 26.5%

1/1 = decimal odds of 2, so 1.05/2x100 =52.5%

[Omm]

I use a 5% ROI ie £1.05 returned for every £1 bet - unless I feel that I'm sure that the bet is better than that. 

The Kelly "system" is designed to maximise bankroll growth but over-staking is more detrimental than under-staking, so being conservative is best.

You can convert the ROI into a percentage win quite simply

If your ROI is 5%, just divide 1.05 by the decimal odds of your bet and multiply by 100, e.g. :

3-1 = decimal odds of 4, so 1.05/4x100 = 26.5%

1/1 = decimal odds of 2, so 1.05/2x100 =52.5%

Thanks doubleup, very helpful. All about the maths!