Kelly criterion calculator for binary options
The mathematically optimal stake for maximising long-run growth — plus the fractional versions that most professionals actually trade.
Turn your edge into the mathematically optimal stake — then take a safer slice of it.
Notice the curve falls off a cliff past the peak. Staking more than full Kelly grows the account slower and blows it up faster, which is the exact trap most traders walk into.
What the kelly criterion calculator does
The Kelly criterion answers one precise question: given a known edge, what fraction of the bankroll maximises the long-run growth rate? Bet less and you grow slower; bet more and you grow slower too, then eventually go broke.
For binary options the inputs are simple — your win rate and your broker payout. The output is a percentage of the balance. Feed in a 60% win rate at an 85% payout and full Kelly suggests around 12.9% of the account per trade, which is far more than any sane trader risks.
That is why the calculator also gives half and quarter Kelly. Half Kelly gives about 75% of the growth with roughly half the volatility, and it is much more forgiving when your estimated win rate is a little optimistic — which it always is.
The formula, explained
f* = ( p × b − q ) ÷ b
- f*
- — optimal fraction of bankroll to stake
- p
- — probability of winning (your win rate)
- q
- — probability of losing, i.e. 1 − p
- b
- — net odds received — for binaries this is the payout, so 85% payout is b = 0.85
If f* is zero or negative you have no edge and the correct stake is nothing. Because binaries lose the full stake, b is always below 1, which makes Kelly fractions here larger and more volatile than in markets with partial losses.
A real set of numbers
| Win rate | Full Kelly | Full stake | Half Kelly stake | Quarter Kelly stake |
|---|---|---|---|---|
| 54% | 0.9% | $9 | $5 | $2 |
| 57% | 6.4% | $64 | $32 | $16 |
| 60% | 12.9% | $129 | $65 | $32 |
| 65% | 23.8% | $238 | $119 | $60 |
| 70% | 34.7% | $347 | $174 | $87 |
Full Kelly at a 65% win rate says stake $238 of a $1,000 account. Mathematically optimal, psychologically unbearable, and catastrophic if your true win rate is 58% rather than 65%. Quarter Kelly is the realistic column.
When to use it — and when not to
Use it when
- You have 200+ logged trades and a win rate you actually trust.
- You want an upper bound on stake size — never risk more than full Kelly, ever.
- You are comparing assets with different payouts and want stake sizing to follow the edge.
Don't rely on it when
- Your win rate is estimated from a handful of trades — over-estimating p by 5 points can double the suggested stake.
- You cannot emotionally handle the drawdowns full Kelly produces; use quarter Kelly and stop worrying about it.
- Your edge is unstable across sessions or market conditions.
Kelly criterion calculator questions, answered
+Is Kelly criterion good for binary options?
As a ceiling, yes. As a literal instruction, rarely — full Kelly produces 40–50% drawdowns routinely, and it assumes you know your win rate exactly. Most professionals trade a quarter to a half of it.
+What is half Kelly?
Half the Kelly fraction. It captures around three quarters of the optimal growth rate with substantially lower variance, and it is far more robust when your inputs are imprecise.
+Why does Kelly say zero at my win rate?
Because the win rate is at or below the breakeven point for your payout, so there is no edge to size. Fix the strategy before sizing it.
+Kelly vs fixed percentage risk — which is better?
Fixed percentage is simpler and safer for most traders. Kelly is worth using when your edge varies a lot between setups, because it naturally stakes more on the strong ones.
Put the numbers to work
Sizing is half the job — the other half is the entry. TradeFather's free signal engines call direction and expiry on Quotex, Pocket Option, Binomo, IQ Option, Olymp Trade and Expert Option, and every tool on this site is free with no subscription.