Calculate expected value based on your estimated probability vs. market price.
What do you think the true probability is?
Current price to buy YES on the market
You have a 10.0% edge over the market
Expected Value
+$20.00
+20.0% of stake
Your Edge
+10.0%
vs market implied prob
If You Win
+$100.00
60% chance
If You Lose
-$100.00
40% chance
Kelly Criterion
Optimal bet size is 20.0% of your bankroll.
EV = (P(win) x Profit) - (P(loss) x Loss)
If your estimated probability is higher than the market price, you have an edge and the bet is +EV.
Example: If you think something has a 60% chance but the market is pricing it at 50%, you have a 10% edge.