Hedging your bets, then, is gambler’s insurance – a way to limit your loss or lock in some gain when your first bet is looking unstable. You are essentially making another bet that covers the opposite of your first bet.
The example we all reach for is the Grand National. You back a horse at 100/1 months in advance for a tenner, and it’s now 10/1 on the day of the race. You have a potential £1,000 profit riding on it, but you’ll lose your £10 stake if it loses.
This is where hedging comes in.
You could lay the same horse on an exchange at the current 10/1 (11.0 in decimal) for about £92. If your horse wins, your original bet pays £1,000 profit and the lay costs you about £918, leaving roughly £82. If it loses, you keep the £92 lay stake and lose your £10, leaving roughly £82 again. You’ve locked in about £82 either way, before the exchange takes its commission and as long as the lay is fully matched.
There are numerous hedging opportunities there with football too, especially with in-play. Maybe you’ve backed Chelsea to win against Brighton at evens for £100 but Brighton get off to a flying start and Chelsea’s odds drift out to 3/1. You could back Brighton or the draw to cut your potential loss whatever happens.
The key is recognizing when things have changed enough to hedge. Sometimes it’s odds movement, sometimes it’s what you’re seeing happen before your eyes.
Live betting made hedging so much simpler as you get to react in real time. Your accumulator’s going along just fine until the final leg, so you hedge by backing the opposing outcome to lock in a return. Sounds completely logical when you have good money on it.
There are many different ways of doing it though. Partial hedging means you’re still at risk but reduce the risk. Full hedging removes most of the risk but caps your potential winnings. It’s a matter of what you’re satisfied with really.
Others use hedging strategically from the start. They will place money on long-term markets like Premier League winner or tournament outright, and hedge once prices narrow over the course of the season. Not a bad means of banking returns if you have made a solid early doors bet.
The only drawback is that hedging usually takes away your maximum possible win. You’re risking potential big wins in exchange for safety, which isn’t for every type of bettor. Some gamblers like to see their initial bets ride and reap whatever reward comes their way.
Timing is everything with hedging. Do it too early and you will lose your first bet to come in. Hold out too long and the opportunity may have passed or the hedge bet might not be worth enough to be worth taking.
Exchange betting has facilitated hedging to a large extent since you can lay the selections and also back them. Prior to exchanges, you had to search for a bookmaker with reasonable odds on the opposite result, which was not always easy to accomplish.
The psychological aspect is also interesting. Some punters hedge because they cannot bear the stress of significant possible losses despite the fact that the original bet still seems to have a good chance of working. Other people believe hedging is admitting defeat and will remain with their original opinion.
Intelligent hedging probably equates to working out the math first. Work out what you might win or lose with different levels of hedge, then whether the locked-in return is worth losing the potential bigger win.
Fact of the matter is, there’s no right or wrong about it. Hedging can be a good risk management tactic or cost you money if you over-hedge.
