Bet Sizing with Edge Interview Questions
Bet sizing with edge interview questions covering expected value, bankroll limits, variance, and Kelly-style intuition.
Candidates moving beyond whether a bet is positive EV to how large the position should be.
Separate direction from size
A positive expected value tells you the direction of the decision under a simple model. It does not automatically tell you how much to stake or allocate.
Define edge
Edge is the advantage between your estimated value and the offered price or payoff. Larger edge can justify larger size, but only after considering uncertainty and risk.
Concrete example
A bet with 55 percent chance to win 1 and 45 percent chance to lose 1 has expected value 0.10 per unit. The unit size still depends on bankroll and risk limits.
Include variance
Two bets can have the same expected value but different downside paths. Bet sizing discussions should mention volatility, drawdown, and probability of large losses.
Kelly is a model, not a command
Kelly-style sizing maximizes a log-growth objective under idealized assumptions. In interviews, it is often useful as intuition, with caveats about estimation error.
Common mistakes
Candidates often say to bet as much as possible on positive EV. That ignores bankroll, model uncertainty, utility, and constraints in the prompt.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.