Modern finance · 1950s–1990s
1956
How much to bet
John Kelly works out the bet size that grows money fastest over time.
Working at Bell Labs, John Kelly published a formula in 1956 for how much of your money to stake on a favourable bet. Betting more than that raises the risk of ruin.
💡 Why it made sense then
Knowing you have an edge isn't enough; betting too much can still wipe you out.
Ideas it gave us
- 🎯 Position sizing
Position sizing is deciding how much money to put into a single trade, usually based on how much you're willing to lose if it goes wrong.
Practise with $10,000 in play money
Free. No real money involved.