Source: https://mochatrade.com/learn/glossary/kelly-criterion

# Kelly criterion
URL: https://mochatrade.com/learn/glossary/kelly-criterion
Last modified: 2026-10-17

The Kelly criterion is the bet size that maximises long-run growth given your edge and odds. Bet above it and growth falls fast, at about twice Kelly it turns negative despite a real edge, so traders use a fraction of it. [Module 5](https://mochatrade.com/learn) works it through, and [Druckenmiller](https://mochatrade.com/blog/stanley-druckenmiller-built-a-framework) shows concentration when the edge is clear.

## Related terms

- Risk-reward ratio: https://mochatrade.com/learn/glossary/risk-reward-ratio
- Hedging: https://mochatrade.com/learn/glossary/hedging
- Margin call: https://mochatrade.com/learn/glossary/margin-call
- Buying power: https://mochatrade.com/learn/glossary/buying-power
- 10-year Treasury yield: https://mochatrade.com/learn/glossary/10-year-treasury-yield
- Fractional shares: https://mochatrade.com/learn/glossary/fractional-shares

Educational content only. Not investment advice. Leveraged products magnify losses as well as gains.