Bet Sizing Core Concepts Kelly Criterion (Discrete) For a binary bet with payoff odds b, win probability p, and loss probability q = 1-p: f = (b p - q) / b where f is the optimal fraction of wealth to wager. The Kelly criterion maximizes the expected logarithm of wealth (geometric growth rate) over repeated bets. Properties: - f = 0 when edge = 0 (no bet when there is no advantage) - f < 0 when negative edge (the formula tells you to bet the other side) - f 0 only when b p q (positive expected value) Note: the reference script's clamps negative Kelly fractions to 0 (no bet) rather than return…