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What Does Hedging Your Bets Mean?

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What Does Hedging Your Bets Mean?

Thu Oct 14, 2021 9:04 am

Hedge is a term that is often thrown around. From hedge funds to hedge betting, it has many meanings. We are only interested in the latter. Notable for being a sports betting strategy whereby players can limit their exposure to potential losses, hedge betting is tricky to get the hang of, especially when you try to guarantee a profit. Akin to “middling” a bet, hedge betting requires concentration and skill. Of course, studying hedge bets to a proficient enough level to make serious money can take years. However, we are going to introduce you to the concept at its most basic, giving you the knowledge that you need to take it further.

What Is a Hedge Bet?

A hedged bet is essentially a wager whereby the bettor uses a strategy to reduce the likelihood (or risk) that they will lose to better guarantee a profit. It involves placing wagers on both sides of a bet. This most commonly occurs when a bettor is unsure which side in a match will prosper. For instance, they might feel as though they have a good inkling of which team or player will prevail and bet on that. However, if they decide to back the other team/player, too, they are guaranteed to walk away a winner. The odds are that the win will not be as large as you might like (because you are placing two bets), but that second bet does provide a sort of insurance against coming away with nothing at all.

Haven’t Bookies Already Thought of This?

Yes, they have. Ordinarily, bookmakers have odds that make it less advantageous for you to hedge your bets. Therefore, hedging requires a bit of skill. One of the best ways to make this work is to look for discrepancies in a bookmaker’s odds, and this is what the most skilled hedging players will do. As odds change over time, they will place their first bet long before their second, allowing them to take maximum advantage of long odds - or at least, as much as possible. Confused?...keep reading

How Futures and Hedging Work Together

The problem with backing both outcomes in a sporting event at the same time is that many bookmakers will have disadvantageous odds on both outcomes. One team or player is likely to have relatively short odds, and the other will probably have long ones. This is because one side is less likely to triumph than another. The closer to the event you get, the more obvious the outcome becomes.

However, if you were to book your bets long before the scheduled event, you can take full advantage of odds discrepancies. A favourite will always have longer odds the earlier you bet. By placing what is (at the time) a future bet on, let us say, Manchester City to beat Manchester United one month in advance, you could get fair odds on that event occurring. As the matchday approaches, the favourite’s (Man City) would retract, becoming shorter, and the underdog’s (Manchester United) may broaden and get longer.

If you placed a bet on Man City to win earlier enough when their odds were longer than they are now, and then another on United right before kick-off when the odds are long, you can be sure to take a maximum profit from the game, even with two bets, irrespective of who goes on to win. Of course, if the match ends as a draw, and you have not backed that, too, you are stuffed.

How to Place a Hedged Bet

Let us imagine that you want to place a pre-tournament bet of £50 on Croatia to win Euro 2020, with odds of 40/1. You will ordinarily win £2,000 with this bet if they make the final and win. However, Croatia are massive outsiders, compared to the likes of Italy, France, and Germany. If you were to bet on Croatia on the eve of the final, their odds would be a lot less than 40/1, resulting in a smaller win.

Of course, to hedge your bets, you need to wager on Croatia’s opponents. Your best shot of doing this is in the final seconds of the other semi-final (the one which does not feature Croatia). As soon as the winner is announced (and the team that would face Croatia), you should slap down your bet, especially if that team is likely to beat Croatia. This will give you your best chance of success with decent odds. However, if the team that makes it through is considerably weaker than Croatia (making Croatia the favourites), then you would be best waiting until just before kick-off or the day of the final when the odds on the second team would likely be longer.

To hedge your bet, you need to have both outcomes of the event covered. In theory, if you want to be extra-safe, you should also cover a draw. However, doing so can often see you fail to make a profit. The key to making a profit is being assured of taking home more than you have staked.

For instance, if you want to bet £1 on a home win, away win and a draw, then your total expenditure will be £3. You must be sure that each of the teams (and the draw) have odds of over 3.00 to guarantee a profit. Most bookmakers will be sure to not let this happen, hence why you need to get your bets in early for some teams and later for others.

Is Hedge Betting Worth the Trouble?

Hedge betting takes time and patience. You need to consistently scout around for the best odds. Anything other than the best odds will be unlikely to lead to a decent return. As you will be backing multiple outcomes with your bets, you will also need a sizable balance. Do not get carried away with your betting, either. Be precise and careful. However, if you read up on how to hedge your bets and study the strategy behind it, you can undoubtedly make a profit by betting this way.

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