Understanding the Kelly criterion is essential for any investor. I first came across it years ago after I lost around $1500 “investing" in a leveraged paired share trade. I was right on the direction of the overall movement of the shares (one up, one down) yet I still lost money. At the time I could not understand how I could be both right and still lose money - then I learned about the Kelly criterion. It was the best $1500 investment I ever made.