Kelly sizing is the formula for how much capital to allocate to a high-confidence position to maximise long-run compound growth without risk of ruin. Full Kelly is too aggressive in practice — most practitioners use ½-Kelly, which gives up a small amount of expected growth for substantially lower variance and drawdown risk.
Kelly 1956 derived the bet size that maximises long-run log wealth. In practice, full Kelly is too aggressive — a single mis-estimate of edge tanks the portfolio — so practitioners use ½-Kelly. Framler infers edge from the composite’s divergence from neutral, modulated by interval width and conviction, then caps the recommendation at a conservative fraction of portfolio so a single high-conviction call cannot blow up the account. Output: dollars per $10k allocated.