What Exactly is 1/2 kelly?

jack.jackson

jack.jackson

Well-Known Member
Please dont ridicule, but what exactly is to be gained by goin 1/2 kelly opposed to full kelly. How different are the betting strategies. Does 1/2 kelly cut your RoR in 1/2 as well? Whats this mean exactly?
 
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rukus

Well-Known Member
that is the beauty of fractional kelly betting - RoR decreases much faster than EV, wehther its .75 kelly, 0.5 kelly, or 0.25 kelly.
 
Automatic Monkey

Automatic Monkey

Banned
rukus said:
that is the beauty of fractional kelly betting - RoR decreases much faster than EV, wehther its .75 kelly, 0.5 kelly, or 0.25 kelly.
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On the other hand, risk of non-ruin increases slower than EV. Would you rather have a 98.2% chance of making $1M or a 86.5% chance of making $2M? Being at exactly full Kelly maximizes your profit with respect to risk. Conservative betting is nice, but there's no free lunch.
 
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rukus

Well-Known Member
AM, i definitely agree. but with people these days so caught up on optimal betting and or preserving bank/minimizing RoR and and fluctuations (yes i know, minimizing positive fluctuations as well, sadly), fractional kelly is just about the best thing they can do in my opinion to smoothen out their games. everyone gets so caught up in full kelly betting because it "maximizes" LN of bank growth that they fail to account for the wild swings it causes. but i definitely agree with you - full kelly is THE way to get maximum growth rate, and you give up a bit on either side (fractional or multiple of kelly). the math is there to prove it.

Me, i would gladly pay a bit for my "lunch" so i dont throw it up due to the more forceful swings of full kelly ;). i personally play at about half of full kelly and give up +EV to do that.

[sorry - editing this because i dont think anyone answered sagefrog's question yet - yes, if you cut your bets in half, you cut your $ win rate in half.]
 
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jack.jackson

jack.jackson

Well-Known Member
So In other words, those of us playing on limited BR; it would make perfect sense to use 1/2 kelly betting. Well, makes cents$ to me anyway.
 
blackjack avenger

blackjack avenger

Well-Known Member
Starting to Compare Apples to Oranges

The posts are starting to compare 2 different things.

Fixed Kelly betting.
Fractional Kelly betting.

With fixed Kelly betting you keep your bets the same as your bank goes up and down:
So at half fixed Kelly.
ROR is 1.83
EV is cut in half

Then there is fractional Kelly betting. In theory you resize your bets constantly as your bank goes up and down.
So at half fractional Kelly betting
ROR is 0%
EV is cut to 75%
 
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Kasi

Well-Known Member
jack said:
So In other words, those of us playing on limited BR; it would make perfect sense to use 1/2 kelly betting. Well, makes cents$ to me anyway.
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Me too lol. Maybe even less lol.

I doubt if many pros play to full-kelly for a variety of reasons.

The formula for lifetime ROR, if you're interested, is pretty simple, even for me lol, @EXP(-2/kelly fraction). So you should get Norm's numbers substituting 1 and .5 for the kelly fraction. Even simpler, perhaps, is that half-kelly ROR is full-kelly ROR squared and quarter-kelly is half-kelly squared.

Another aspect to consider is that at fully-kelly you have a 10% chance of losing 90% of your roll at some point, 20% chance to lose 80%, etc.

But at half-kelly only a 0.1% chance of losing 90% of your roll, 0.8% of losing 80% up to 12.5% of losing 50% compared to 50% chance at full-kelly. In other words less stress lol.

Naturally, as always, the trade-off is EV. In this case, at half-kelly, your per-hand win rate will be halved.
 
jack.jackson

jack.jackson

Well-Known Member
Kasi said:
Me too lol. Maybe even less lol.

I doubt if many pros play to full-kelly for a variety of reasons.

The formula for lifetime ROR, if you're interested, is pretty simple, even for me lol, @EXP(-2/kelly fraction). So you should get Norm's numbers substituting 1 and .5 for the kelly fraction. Even simpler, perhaps, is that half-kelly ROR is full-kelly ROR squared and quarter-kelly is half-kelly squared.

Another aspect to consider is that at fully-kelly you have a 10% chance of losing 90% of your roll at some point, 20% chance to lose 80%, etc.

But at half-kelly only a 0.1% chance of losing 90% of your roll, 0.8% of losing 80% up to 12.5% of losing 50% compared to 50% chance at full-kelly. In other words less stress lol.

Naturally, as always, the trade-off is EV. In this case, at half-kelly, your per-hand win rate will be halved.
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Thankyou Kasi. I'll read it, then re-read it again.
 
Sonny

Sonny

Well-Known Member
Automatic Monkey said:
50%. Your bets are cut in half, so your win rate is cut in half.
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zengrifter said:
Not according to this -
Many have found the "half Kelly" strategy to be a good compromise. You bet half of edge/odds. This achieves 3/4 the compound return of Kelly betting with much less volatility.
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I believe the quote above assumes that the player is constantly resizing his wagers in order to compound his return. We are talking about fixed Kelly betting here. If you bet half as much and never resize your bets then your EV is half.

-Sonny-
 
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Dopple

Well-Known Member
But if you are playing well and feel confident I would say go full kelly as long as you get off to a decent start and a tap out is not the end of the world. I think we are talking in the 80% range are we not on ROR?

Just my view.
 
sagefr0g

sagefr0g

Well-Known Member
Dopple said:
But if you are playing well and feel confident I would say go full kelly as long as you get off to a decent start and a tap out is not the end of the world. I think we are talking in the 80% range are we not on ROR?

Just my view.
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i think ROR with full kelly is normally 13% but i'd want to add another 13% for human error to where yea i guess close to 80% feel good factor lol.
 
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