Hedging your bets
If you’re hedging your bets, you’re protecting yourself against financial loss by covering more than one outcome or result. You may have placed a pre-match bet that you feel uncomfortable with, or you may find yourself in an arb like situation late in the game. By hedging your bets and backing more than one outcome, usually in-play, you can limit a loss or guarantee a profit. It’s like a form of insurance, and you’re laying off part of your original risk to protect yourself. You can do this nicely with the back and lay options on a betting exchange, which you should read about here, but it’s also possible to hedge your bets using your regular bookmakers.
Pros and cons of hedging tour sports bets
- Hedging a bet by backing more than one outcome can provide good cover if you think your pick is in a vulnerable position.
- It’s possible to be in an in-play situation where backing a certain outcome could guarantee an overall profit, almost like an arbitrage situation.
- At some point you will make the wrong decision. Hedging bets can be good cover, but it can also cost you profits if it turns out to be unnecessary.
- You’re handing the bookmaker more of a margin. Even if you do cover a loss or secure profit, rarely are you going to make more, and bookmakers have their 5% to 7% margin on bets.
If you’re learning to use the betting exchanges, then you should read about backing and laying and trading your bets before covering hedging your bets. If you’re using a bookmaker and you’re comfortable betting, knowing how to hedge your bets is a very useful addition to any bettors arsenal.
What does hedging your bets mean?
Hedging a bet is like providing yourself some insurance. You must have one bet placed already to be able to hedge it. If you have an active bet, you can hedge it by betting on a market that involves a directly opposite outcome to what you’ve already bet on.
Why would you bet against yourself, you ask? Well, if you hedge your bets at the right odds, you cannot lose and may even guarantee profit. You can cover all outcomes in the betting market at a stake and odds that mean you either stand to lose less, lose nothing or profit. Many people will tell you to avoid things like hedging and cash-out options, as they only play into the hands of the bookmakers.
Whilst that may be true in some ways, can anything that protects your bankroll or means you are taking less of a risk be that bad? If you ask a betting trader who works on betting exchanges as opposed to your regular bookmakers, they’ll tell you no.
Below are a few simple reasons why a bettor would hedge their bets, before breaking down hedging your bets on the exchange and with a bookmaker.
Why hedge your bets?
- Lower risk. Betting against your original bet reduces the amount you are liable for (stand to lose) when betting.
- Protect your bankroll. Even if you don’t fully cover yourself when in a winning position, you stand to lose less whilst still making a good profit. It’s a reasonably good betting strategy in uncomfortable situations.
- It can guarantee a profit. If for example you bet on a team to win at 2.50 and they lead 1-0, it’s likely you’ll get betting odds above 2.00 on the losing team to win or draw later in the game. Betting on this covers all three outcomes, and guarantees a profit.
- New betting market information/Odds shift. Betting odds are always changing once an event is underway and they are shaped by what is happening in that event. It’s important to be able to reassess your position in a game and understand if there is anything you can do to sensibly reduce risk, prevent a loss or increase profit from betting.
Hedging Calculators for betting exchange users…
The optimal way to calculate how much you should stake when hedging a bet on the betting exchange is best decided by a calculator. They allow you to enter the back stake, back odds, lay odds and also considered the commission charged on winning bets at your exchange. The calculators also allow you to choose a percentage you wish to trade-out from 0% to 100%.
If you have already placed a lay bet on the exchange and now need to back an opposing outcome, the calculator works in exactly the same way. Just be sure that you’re using the lay tab and entering the correct odds in each box.
Key Tip: If you hedge a bet by betting on the same single betting market twice on your exchange, you’ll be charged commission twice, even though only one bet can win. That could mean 4% instead of 2%. Always beware of this and be sure it’s reflected when using a calculator.
Hedging your bets is more use to those who use the betting exchanges and prescribe to trading methods to make their profit from sports betting. A professional is far more likely to hedge their bets than a casual bettor because of the time, effort and level of knowledge it takes to successfully hedge your bets when trading. You can hedge bets on most sports and situations. But it may be used by a casual bettor in the right circumstances, or a professional who sticks to bookmakers. When your chips are down and you’re going through a tough run then there’s nothing wrong with using hedging methods to protect your bankroll in the right situations.
Hedging your bets when using a bookmaker is important to cover as it’s something that a bettor can utilise. However, hedging your bets is of much more use to those who use the betting exchange. It’s absolutely vital to understand and utilise hedging if you wish to make the most of situations whilst reducing your overall liability on the betting exchanges.