Betting questions ask whether a wager is worth taking, how much of your bankroll to stake, and when to stop playing. Trading firms such as SIG, IMC and Five Rings use them because sizing a bet with an edge is the same decision as sizing a trade.

1. 1

   Price the game first

   A bet is worth taking only if its expected value beats its cost. The fair price to play is the expected payout.

2. 2

   The Kelly fraction

   To maximise long-run growth, stake the edge divided by the odds: with probability p of winning b to 1, bet (bp minus (1 minus p)) divided by b of your bankroll.

3. 3

   Fractional Kelly and ruin

   Full Kelly is volatile and assumes you know the odds exactly. Betting half of it gives up a little growth for much lower risk of a deep drawdown.

4. 4

   Stop or continue

   In games where you choose when to stop, work backward: continue while the expected value of another round beats what you would keep by stopping now.