• A formula that is used in gambling to determine the amount of money that a gambler should bet on a particular wager to maximise returns while controlling risk.
• It is named after John Kelly, a researcher who worked at AT&T’s Bell Laboratory, in his 1956 paper dealing with signal noises in long-distance communication lines.
• Over the years, the Kelly criterion has been adopted by many investors to help them build an ideal investment portfolio.
• According to the criterion, the amount of money allocated towards different investments should be based on the potential return on a winning investment and the percentage of total investments that are likely to be successful.

Source:TH