Hedge Betting Tips: How Hedging Bets Works

Very rarely –if ever – is there such thing as a ‘sure thing’ in sports betting. If there was then there would be plenty of rich bettors about. Unfortunately to become a successful bettor what separates the winners from the losers is often a great deal of knowledge and betting nous, coupled with a bit of luck along the way.

Hedging is placing a second bet against your own first one, to reduce what you stand to lose if it goes wrong. It is a way of managing an open position, not a way of guaranteeing a return — hedging almost always lowers your best case as well as your worst, and that trade is the whole decision.

What Is Hedge Betting?

Hedging means placing a further wager on another outcome of the same event so that more than one result leaves you in an acceptable position. Whether any of those positions is a profit depends entirely on the prices you got, and often none of them is.

Hedging is often confused with arbitrage, and they are not the same thing. Arbitrage means backing every outcome at prices that cannot all lose, across two or more bookmakers, and it is a pricing error being exploited. Hedging starts from a bet you already hold and reduces its risk, usually at a cost. "Laying" and "greening up" are exchange terms for hedging; "arbing" is not. The concept of hedge betting is to reduce the risk of the market we are betting on, but this comes at a cost of which we will explain later in this article.

Before we continue it’s going to be easier to look through a working example so you can increase your grasp on the subject.

Hedge Betting Examples

Let’s say we place a £10 wager on Liverpool to win the FA Cup at odds of 6/1 prior to the tournament starting. As the tournament progresses Liverpool happen to make the final against Portsmouth with the match odds for Portsmouth to win the game being at 2/1 and the draw also being at 2/1.

At this point we decide to hedge, so that more than one result leaves us in a position we can live with. So we place £10 on Portsmouth to win and £10 on the game ending in a draw. Let’s look at the numbers.

• Amount wagered = £30 (£10 on Liverpool to win at the start, £10 on Portsmouth on match day and £10 on the draw also on match day).

• Potential Return = If Liverpool win we would get £70 in returns (£10 @ 6/1 inc. stake back)

If Portsmouth win we would get £30 in returns (£10 @ 2/1 inc. stake back)

For a draw after 90 minutes we would get £30 in returns (£10 at 2/1 inc. stake back) — and because a drawn final is decided by extra time or penalties, the original Liverpool bet can still win on top of that

So on these three prices the worst case returns the £30 staked and the best case is better than £70, with everything above break-even coming from the original Liverpool bet. That is this example at these prices, not a property of hedging.

When Not to Hedge Bets

One of the biggest reasons why many punters are discouraged when it comes to hedging bets is that it reduces their overall return. As you can see from the above example if we had let our original bet of Liverpool to win the cup ride, then we would receive a much larger payday if we hadn’t hedged.

Profit is profit I hear you say. And yes, whilst this is certainly a valid point you have to bear in mind that any sports bet you place should be on the back of a string of research into that specific sport, market, team, and whatever other variables you can think of. By hedging you essentially doubt your initial judgment on that market and your research.

Another reason not to hedge is the added ‘juice’ or commission you will have to pay to bookmakers. As you make more bets then the online bookmaker will be skimming their share with each bet. This means it’s actually costing you more and reducing your overall profits. This plays an especially important role if you are betting for smaller stakes due to the hit in profit amounts – essentially percentages stay the same, but this is a numbers business and when numbers are already small then it becomes less of an incentive to win.

When to Hedge Your Sports Bets

You can look at this section as a counter-argument for the above if you wish.

Hedging gets money back into your account before the event settles, and that is its appeal — you are exchanging an uncertain outcome for a smaller, more certain one. It may seem obvious but many bettors forget this when chasing that big payday. If for whatever reason you don’t feel as comfortable about your bet from the moment you first placed it then there is no shame in getting out for either a reduced profit or even a small loss if you think the time is right.

There are simply tons of variables that can affect your bet from the time to placing your wager to the time in which your window opens and you can hedge your bet. A lot are sports-specific but carrying on with football as our example, say the star striker falls ill before the game and he’s basically been carrying a team then this will likely have an effect on the outcome of the result, and more importantly the odds. Whether a hedge is available depends on there being a market, and a price in it, when you need one.

Hedging Live Bets In-Play

Hedging a live bet means placing a further wager during the game, usually to cut what you stand to lose on a position that has moved against you, or to lock in part of a gain on one that has moved your way.

You can look at hedging your live sports bets in one of two ways. The first being that you are limiting your exposure and hence limiting the likelihood you will lose money across a range of results. The second factor being that you are limiting potential winnings by spending more money on other bets.

It’s important to work out which you want to do before placing an in-play bet. The unpredictability of sports markets is what makes a hedge worth considering at all — and hedging reduces that exposure rather than removing it, since you still need the second price to be there when you want it.

Why Does ‘Hedging’ Work Well With in Play Markets?

Live wagering occurs at an alarming pace and is often tough to predict. Sports events make every second worth their weight in gold giving you increased opportunities to place your bets at favourable odds. As time is of the essence it increases our exposure or variance, if you will, to bets going wrong in a very short space of time. Hedging in live markets is a way of responding to those swings rather than sitting through them.

The downside to hedging bets from in play a market is one of the reasons we have touched on, time. Finding the right amount to bet on each action can take some doing, even with a hedging calculator and often bets can be tough to find. That being said, an in-play bet that can be hedged at the right prices does reduce your exposure — the difficulty is that the opportunity is uncommon and the prices move while you are working it out.

It’s also worth keeping an open mind to using more than one bookmaker to hedge. In fact, in some cases it’s almost impossible to do this without the use of multiple bookmakers so more than one account is essential.

In-Play markets are a great way to hedge bets. Let’s take a look at a couple of examples.

Example 1 - Let’s say that we backed Manchester United to win the Champions League before the tournament started at 6/1 and we bet £1 on the outcome. Manchester then makes the final and we decide to hedge, covering the other two results to see what that does to the position. The odds on our opponent to win, let’s say Bayern Munich for arguments sake is 2/1 and the draw is also at 2/1. We now place £1 on both the draw and a win for Bayern Munich, bearing in mind that we still have our bet of Manchester United to win the competition from the start.

So we have a total stake of £3.00 and we will receive returns of £7.00 if Manchester United wins, £3.00 if the game ends in a draw and £3.00 if Bayern Munich wins. This results in us breaking even over two results and profiting £4 on a Manchester United victory.

So the hedge has cut the best case from £6 of profit down to £4, in exchange for breaking even on the two results that would otherwise have lost the stake. Whether that trade is worth making is the whole decision, and it depends on how likely you think the original bet still is.

Example 2 - In this example we will switch sports to live tennis betting and look at a single game rather than a tournament. We have two players; Rafa Nadal is the favorite before the match at even money to beat Roger Federer who is 2/1. Nadal looks good value at even money so we place a £10 bet on him to win. Let’s assume this game is best of three sets.

The first set does not go to plan and Federer ends up winning the first. The odds now switch in Federer’s favour who lies at even money, whilst Nadal drifts to 2/1. But Nadal holds his nerve in the second to claim a set back and go into the final set with the momentum in the match.

The odds switch again, this time Nadal is now 1/2 favorite whilst Federer is at 3/1 to go on and win. We decide that this is a good point to hedge our bets. If we bet £3.34 on Federer at 3/1 we know that if he wins we will receive £10.02 profit, which will cover our initial bet on Nadal. If Nadal goes on to win we make £10 profit minus our hedged bet of £3.34 equalling £6.66.

At these two prices the position returns something on either result, which is what the hedge bought — and it cost the difference between the £10 that was riding on Nadal alone and the £6.66 now riding on him.

Keep a Calculator Handy

Hedging bets takes time to work out and also takes a good maths brain to calculate. It’s exactly for this reason that we highly suggest you have one of the many free hedging calculators on hand when you’re sifting through your live betting markets. These will let you put the numbers in quickly and see what a given stake does to each outcome — including, often enough, that the prices on offer do not leave you anywhere you want to be.

Basic Hedge Betting Tips

• Never rule out the possibility of hedging your bets: Don’t feel that you will be ‘chickening’ out if you hedge. Narrowing the range of outcomes is a legitimate decision, and it is the one thing a hedge reliably does.

• Don’t be hasty: If you’ve done your homework on a specific market or event then trust your instincts and back your knowledge especially if you find yourself in a favourable position early on.