Most traders focus on finding the next breakout coin. But the truth is: how much you invest often matters more than what you pick. Even predictions with high accuracy can lead to poor results if you use the wrong position size. That’s why smart investors study the Kelly Criterion — a principle from probability theory that tells us how to size trades for long-term growth.

📐 What Is the Kelly Criterion?

The Kelly formula tells us how much of our capital to allocate to a bet (or trade) given its potential return and volatility. In a neutral market, the math suggests a surprising result:

📊 The optimal position size is 50% or less — not 100%.

Why? Because with an allocation 50% (or less), you’re always in a position to buy low and sell high.

  • When price drops, your position shrinks below 50%, and rebalancing requires buying more.

  • When price rises, your position exceeds 50%, and rebalancing means selling the extra.

That’s right: following Kelly forces you to buy low and sell high — the golden rule of trading and every trader's dream.

However, most people can’t do this consistently. They go all-in when prices are high, panic-sell during crashes, and miss the point of long-term compounding. Even if someone starts with discipline and technical knowledge, as time goes by and profits accumulate, he/she will gradually feel overconfident and increase position sizes, which eventually leads to ruin. 

⚖️ QuantaWin Trader Enforces This Discipline

QuantaWin Trader is a desktop tool built to help traders apply these principles:

  • No leverage — just spot-only portfolio optimization.

  • Systematic rebalancing to enforce buy-low and sell-high.

  • Portfolio optimization using Modern Portfolio Theory and Sharpe Ratios.

  • Automatic interest earning with Simple Earn.

It’s built to enforce discipline — even when emotions try to take over.

⚠️ Why Avoiding Leverage

Many traders use leverage to “amplify” gains. But Kelly theory tells us that over-betting leads to exponential risk and net loss in the long run. Going beyond optimal position sizes doesn’t just reduce expected returns — it can lead to complete capital loss.

Leverage is especially dangerous in crypto, where price swings are large and liquidity can vanish during stress events. It turns manageable drawdowns into liquidation events.

🔎 About QuantaWin Trader

It is a free tool that can be used on Windows and Mac OS. It analyzes Binance market data and builds portfolios that follow long-term principles — no coding required. It allows using portfolio theory without spreadsheets or scripting.

This software is independently developed and uses Binance APIs. It is NOT endorsed by Binance. Always do your own research before trading.

Please follow my account for more analyses rooted in mathematical principles. If you have any question or comment, feel free post below.