https://mindoverticks.com/categories/risk-and-position-sizing/Recent content in Risk and Position Sizing on Mind Over TicksHugoen-usSun, 25 Oct 2026 00:00:00 +0000https://mindoverticks.com/posts/kelly-small-sample-drawdowns/Sun, 25 Oct 2026 00:00:00 -0400https://mindoverticks.com/posts/kelly-small-sample-drawdowns/<p>The Kelly criterion is a formula for how much of your account to risk per trade: at a 60% win rate and a 1:1 payoff, it says 20%, or $2,000 on $10,000. In our hypothetical simulation, 46% of traders who sized from a 100-trade backtest bet more than true Kelly, because the win rate they fed in was a guess.</p> <h2 id="what-is-the-kelly-criterion">What is the Kelly criterion?</h2> <p>Kelly is a formula for what fraction of your account to risk on each trade, based on how often you win and how much a win pays compared with a loss.</p>