Hedge betting, more commonly known as hedging, is a popular betting strategy implemented by sports bettors. It can reduce the bettors’ risk and increase their chances of making a profit by covering multiple outcomes in one go. This type of betting is similar to arbitrage betting and matched betting, although there are a few minor differences.
The concept of hedging is simple enough once you get the hang of it. Let’s say there is an upcoming fixture between Liverpool and Arsenal. The odds of Liverpool winning are, to keep things simple, 2/1, and the odds for Arsenal to win are 1/1. The bettor could implement the hedge betting method by placing a £100 bet on Arsenal to win and a £67 bet on Liverpool. In both cases, one of the teams wins, one of the bets wins, and you guarantee a profit of £3.
These bets are popular, but it could take some research in order to eliminate the risk involved with regular sports betting fully. It is important to shop around for the best odds, too, so you can make the most of the markets when hedging. In this OddsMonkey guide, we will look at hedge betting and break down how it works.
Understanding Hedge Betting
As mentioned, hedge betting is a strategy used by gamblers to reduce their risks and guarantee some profits. This type of betting involves placing two or more bets on the same event with different bookmakers or at different odds, which is where betting odds calculators can be useful. The goal is to create a situation where the gambler wins regardless of the outcome of the event.
For example, suppose a gambler places a £100 bet on a football team to win at odds of 1/1. If the team wins, the gambler will receive a payout of £200 (including the original stake). However, if the team loses, the gambler will lose their stake.
To hedge this bet, the gambler could place another bet on the opposing team to win at odds of 2/1. The gambler would need to place a £67 bet on the opposing team to win £201 if the opposing team wins. If the original team wins, the gambler would lose the £67 but receive £200 from the original bet, resulting in a net profit of £33. If the opposing team wins, the gambler would receive £201 from the opposing bet and lose £100 from the original bet, resulting in a net profit of £101.
Hedge bets are often used in situations where the gambler is unsure of the outcome of an event or wants to reduce their risks. It can be used in any type of betting, including sports betting and financial betting. However, it requires careful analysis of the odds and a good understanding of the event being bet on. You can find a whole host of online sports betting guides on our site that can help you with the latter.
Benefits of Hedge Betting
Hedge betting is a strategy used by many bettors to manage their risks and ensure profit assurance. Here are some benefits of hedge betting:
One of the primary benefits of hedge betting is risk management. With hedge betting, a bettor can reduce their exposure to risk by placing additional bets on the opposite outcome. This can be useful in situations where the bettor is unsure of the outcome or where the odds are not in their favour.
For example, if a bettor has placed a bet on a football match and the odds are not in their favour, they can place a hedge bet on the opposing team to reduce their risk. If the original bet loses, the hedge bet will provide some compensation, reducing the overall loss.
Another benefit of hedge betting is profit assurance. By placing additional bets on the opposite outcome, a bettor can ensure that they will make a profit regardless of the outcome.
For example, if a bettor has placed a bet on a horse race and the odds are in their favour, they can place hedge bets on the opposing horse to ensure a profit. If the original bet wins, the hedge bet will lose, though it decreases the risk of the bettor losing all of their stakes.
Hedge betting can be a useful strategy for bettors who want to manage their risks and ensure profit assurance. However, it is important to remember that hedge betting is not a guaranteed way to make money and should be used in conjunction with other betting strategies. Hedge betting is similar to matched betting in this way, as by following a proper matched betting guide, you can minimise your risk and increase your profit, even if the profit margins are small.
Drawbacks of Hedge Betting
Hedging is a very positive strategy when implemented correctly, but as with any sort of strategy or method, there are a few drawbacks that may stop people from trying it out. These include the following:
Potential for Lower Returns
One of the main drawbacks of hedge bets is the potential for lower returns. When a bettor hedges their original bet, they are essentially placing a second bet that is designed to offset any potential losses from the first bet. While this can help to reduce the overall risk of the bet, it can also limit the potential profits that can be made.
For example, let’s say that a bettor places a £100 bet on a football team to win a match at odds of 1/1. If the team wins, the bettor will receive a payout of £200 (£100 bet + £100 winnings). However, if the bettor hedges their bet by placing a £50 bet on the opposing team to win at odds of 2/1, their potential profits will be reduced. If the original team wins, the bettor will receive a payout of £150 (£100 bet + £50 winnings), while if the opposing team wins, the bettor will receive a payout of £100 (£50 bet + £50 winnings).
Requires Significant Knowledge and Experience
Another potential drawback of hedge betting is that it requires significant knowledge and experience to be successful. In order to effectively hedge a bet, a bettor must have a deep understanding of the sport or event they are betting on, as well as the odds and betting markets.
Additionally, hedge betting often involves placing multiple bets on different outcomes, which can be confusing and difficult to manage for inexperienced bettors. This can lead to mistakes or miscalculations, which can result in significant losses.
Overall, while hedge betting can be a useful tool for reducing risk and the potential to lose, it is not without its drawbacks. Bettors should carefully consider the potential benefits and drawbacks of hedge betting before deciding whether or not to use this strategy.
Examples of Hedge Betting
Hedge betting is a strategy used to reduce the risk of loss by placing bets on both sides of an event. Here are a few examples of how hedge bets work:
Example 1: Football Match
Suppose a punter bets £100 on Manchester United to win a football match at odds of 1/1. As the match progresses, Manchester United takes an early lead, and the punter can see that the team is in a strong position to win. However, as the match enters the final stages, the punter becomes nervous that the opposing team might score a late goal and ruin their bet.
To hedge their bet, the punter could place a second bet on the opposing team to win or draw the match. Suppose the punter bets £50 on the opposing team to win or draw at odds of 2/1. If the opposing team does win or draw, the punter will win £150 from this bet, which would offset the loss of the initial bet. There is plenty more information available on football betting that you can check out on-site.
Example 2: Horse Racing
Suppose a punter bets £100 on a horse to win a race at odds of 4/1. As the race progresses, the horse takes an early lead, and the punter can see that the horse is in a strong position to win. However, as the race enters the final stages, the punter becomes nervous that another horse might overtake and win the race.
To hedge their bet, the punter could place a second bet on another horse to win or place in the race. Suppose the punter bets £50 on another horse to win or place at odds of 3/1. If the other horse does win or place, the punter will win £200 from this bet, which would offset the loss of the initial bet. For more information about horse racing betting, you can read our horse racing betting guide, which is packed with useful information.
Example 3: Stock Market
Suppose an investor buys 100 shares of a company at £10 per share, with the expectation that the shares will increase in value. However, as the market changes, the investor becomes nervous that the shares might decrease in value and cause them to lose money.
To hedge their investment, the investor could buy put options on the same stock. Suppose the investor buys 10 put options at £1 per share with a strike price of £8 per share. If the stock price does decrease, the put options will increase in value, offsetting the loss of the initial investment.
In conclusion, hedge betting can be a useful strategy for reducing the risk of loss in a variety of situations. By placing bets on both sides of an event or investing in options, punters and investors can protect themselves from potential losses and increase their chances of winning.
How to Implement Hedge Betting
Hedge betting is a strategy used by many bettors to minimise their risk and potentially increase their profits. Here are some steps to implement hedge bets:
The first step in implementing hedge betting is to identify opportunities. This involves placing bets on different outcomes of the same event. For example, if a bettor wants to bet on a football game between Team A and Team B, they can place a bet on Team A to win and another bet on Team B to win. This creates an opportunity for the bettor to hedge their bets and potentially make a profit regardless of the outcome of the game.
Calculating the Right Stake
Once the opportunities have been identified, the next step is calculating the right stake. This involves determining how much to bet on each outcome to ensure a profit regardless of the outcome of the event. The bettor needs to take into account the odds of each outcome and the amount of money they have already bet.
For example, if a bettor places a £100 bet on Team A to win at odds of 1/1 and a £50 bet on Team B to win at odds of 2/1, they need to calculate how much they should bet on each team to ensure a profit. If Team A wins, they will receive a payout of £200 (£100 x 2.0). If Team B wins, they will receive a payout of £150 (£50 x 3.0). To ensure a profit, the bettor needs to bet more on Team B. If they bet £75 on Team B, they will receive a payout of £225 (£75 x 3.0), which will result in a minimum profit of £25 regardless of the outcome of the game.
In conclusion, implementing hedge betting can be a useful strategy for bettors to minimise their risk and potentially increase their profits. By identifying opportunities and calculating the right stake, bettors can ensure a profit regardless of the outcome of the event.
So, what is Hedge Betting summarised?
Hedge betting is a strategy that can be used in various forms of gambling to reduce risk and increase profit potential. It involves placing bets on multiple outcomes to ensure a profit regardless of the final result.
While hedge betting can be an effective way to manage risk, it is important to understand that it is not foolproof. It requires careful analysis of the odds and a significant investment of time and money.
Additionally, hedge betting is not suitable for all types of betting. Some forms of gambling, such as boxing, may not offer sufficient opportunities for hedge betting.
Overall, hedge betting can be a useful tool for experienced gamblers looking to manage risk and maximise the potential for wins. However, it is important to approach it with caution and to carefully consider the potential risks and rewards. You can find out more about different betting strategies or other ways to make money online on our site.