The Kelly Criterion is a formula for the fraction of capital to stake that maximizes long-run growth given a known edge.
Published by John L. Kelly Jr. in 1956, it balances growth against the risk of ruin. Full Kelly is very aggressive, so most traders use a fraction of it.
Formula / example: Trading form: Kelly % = W - (1 - W) / R, with W the win probability and R the reward-to-risk