Bankroll Management

The #1 reason traders fail is not bad predictions—it's bad money management.

The Kelly Criterion

This is the gold standard formula for how much to bet.

• Goal: Maximize long-term wealth growth while avoiding ruin.
• Logic: If you have a 60% edge, you should bet more than if you have a 51% edge.
• Warning: Full Kelly is volatile. Most pros trade "Half Kelly" or "Quarter Kelly" (betting a smaller fraction of what the formula suggests) to reduce stress.

Diversification

Don't put 100% of your portfolio into one binary event.

• If that one event goes wrong (even if it was 99% likely), you are wiped out.
• Spread your bets across uncorrelated markets (e.g., one Sports bet, one Crypto bet, one Politics bet).

Don't Chase Losses

If you lose $1000, don't immediately make a risky $2000 bet to "win it back". This is "Tilt", and it leads to zero.

---