Fractional Kelly on Deriv
Fractional Kelly takes the Kelly stake and scales it down, for example to half, to make your balance swing less.
How Fractional Kelly works
It uses the same formula as full Kelly, then multiplies the result by a fraction you choose. Half Kelly stakes half as much as full Kelly.
A smaller fraction gives up some growth in return for smaller swings, and it limits the damage if your win-probability estimate is too optimistic.
The rules
- Work out the full Kelly fraction.
- Multiply it by your chosen fraction, such as 0.5.
- Stake = result × bankroll; zero if there is no edge.
A worked example
| Estimated win probability | Share of bankroll | Stake (USD) |
|---|---|---|
| 50% | 0% | 0.00 |
| 55% | 0% | 0.00 |
| 60% | 5% | 50.00 |
| 65% | 10.63% | 106.25 |
Half Kelly on a 1,000 USD bankroll with an illustrative 80% payout. Kelly fraction = (b × p − (1 − p)) ÷ b, where p is your estimated win probability and b is the net payout per unit staked (0.8 here). A result of 0% means no edge, so no stake.
Risks to understand
Still depends on your estimate
A smaller stake helps, but a badly wrong probability is still a problem.
Needs a probability input
Without your estimated win probability, no stake is calculated.
No edge
Scaling a stake down does not create an advantage.
Using Fractional Kelly in Tradely
Choose it from the Progression Strategies dropdown in the Trading Panel, then turn on risk management to add a stop loss and take profit. Practice on a Deriv demo account first and review drawdown and largest loss in Trade analytics. No staking plan creates an edge: progressions only reshape how much you stake, not whether a trade wins.
Test Fractional Kelly on a Deriv demo account before you risk real money.
Get StartedFrequently asked questions
- What is half Kelly?
- Half of the full Kelly stake. It is a common way to reduce volatility.
- Is Fractional Kelly safer than full Kelly?
- It reduces swings and the cost of an over-optimistic estimate. It does not remove risk.
Keep reading
- Kelly CriterionKelly sizes each stake from your estimated chance of winning and the payout. If it finds no edge, the stake is zero.
- Percentage of bankrollPercentage staking risks the same share of your balance on every trade, so stakes shrink as you lose and grow as you win.
- All strategy guidesCompare every staking strategy in one place.
Risk warning: Trading binary options involves a high level of risk and you could lose your entire stake. Only trade with money you can afford to lose. This page is educational and is not financial advice.