Kelly Criterion + Conviction Tier sizing. Half-Kelly default (Kelly assumes accurate probability — few have it). Conviction tier caps the result. Connects to Buffett (circle of competence) + Ackman (concentrated conviction).
Inputs
Account size$
Win probability%
Be honest. Most overestimate.
Win amount% gain
Loss amount% loss
Kelly fraction
Half-Kelly is the standard. Kelly assumes you know probabilities precisely.
Conviction Tier
Recommended Size
$5,000
5.00% of account
Conviction tier (Position) caps you at 5% of account. Kelly would let you go larger.
The Math
Expected value per dollar+8.00¢
Full Kelly %40.00%
Fractional Kelly applied20.00%
Conviction-tier cap5%
Final size (lower of the two)5.00%
Honest Read
Kelly's full size is 40.00% but your conviction tier caps at 5%. The cap is the right call — Kelly assumes you know probabilities precisely; conviction tier protects you from overconfident estimates.