# "Kelly Formula for Scientific Positioning": The Core Secret of Top Players Who Never Go All In

Why do top investors never take all their chips? Retail investors see only a binary gamble of "up" or "down," while the Kelly formula has long revealed the truth: investing is a game of probabilities, and position sizes must be calculated, not gambled!

The core logic of the Kelly formula hides 3 fundamental thinking patterns for making money:

✅ Don’t be greedy: Even with a winning rate of 90%, never go all in—one black swan event can wipe you out;

✅ Don’t be conservative: True opportunities require bold bets, but the scale of "bold" must be quantified using the formula;

✅ Dynamic adjustment: Increase positions when capital rises, reduce exposure when capital falls, always follow the probabilities.

In investment scenarios like BTC and stocks, where "losses are limited, and gains are moderate," the practical application of the Kelly formula is even simpler:

f = p/l - q/g

🔍 Breakdown of variables (easy to understand):

- f: The optimal position size ratio to invest (core answer);

- p: Probability of increase (for example, after analysis, an upward probability of 60%);

- q: Probability of decrease (q=1-p, which is 40%);

- g: Upward potential (for example, a target increase of 20%);

- l: Downward potential (for example, a stop loss set at 10%).

For example: p=60%, l=10%, q=40%, g=20%, resulting in f=20%—the optimal position size is only 20%! When someone tells you to "go all in," pull out this formula, and you’ll know who is gambling their life away and who is rationally making money.

The Kelly formula acts like a "smart capital allocator": it helps you maximize long-term returns while providing a safety cushion for your principal, avoiding bankruptcy due to impulsiveness.

⚠️ 3 Practical Considerations (Key to Avoiding Pitfalls):

1. Relying on precise predictions: Overestimating winning rates or upward/downward potential can turn the formula into a "money-losing tool";

2. Avoiding extreme situations: If the formula calculates a position exceeding 100%, it’s essentially a trap—there’s no absolute guarantee of profit;

3. Actual discount: Experts often use "half Kelly" (half of the recommended betting ratio) to further reduce risk.

In summary: The Kelly formula teaches you not "to win without loss," but "to win without collapsing"—when good opportunities arise, dare to make bold investments, but always keep enough capital to weather bad luck. Replacing gambling instincts with science is the key to long-term investing!