Hedging: where and how it is used and practical examples

Nothing is guaranteed in sports betting. That’s why there are ways for bettors to protect their bets and secure their profits. The method we will now introduce is called “hedging”. In addition to betting, this method is also used in finance.

There is a long, never-ending debate about whether one should hedge a bet. Advantages can be found on both sides of the barricade. Bettors decide whether to hedge a bet based primarily on their risk tolerance as well as the size of their bankroll. The higher the risk tolerance and the higher the bankroll a bettor has, the less likely they are to want to hedge a bet and vice versa.

If your goal is the safest way to bet, then hedging your bet might be for you. However, even if you don’t want to hedge your bet, you should at least know about it. So let’s take a look at this method of betting.

What is hedging a bet?

Hedging a bet is the practice of placing a bet on an opposing outcome after an initial bet in such a way as to make a profit, or at least reduce the loss. Essentially, it is a form of “insurance” on a previous bet.

Where is hedging a bet used?

Bet hedging is most commonly used for long term bets or bets where the odds can change quickly (such as tennis). Hedging can also be used well in live betting.

For this type of betting, odds/bets that offer only two opposing possibilities are ideal, i.e. one team winning (no draw) or more/less a set number of goals/games/sets etc.

What does hedging a bet look like in practice?

Hedging a bet is done in two separate steps. First of all, we choose an initial bet and place a bet on it. In the second step, we wait until the ideal opportunity for hedging arises (i.e. the odds move in the desired direction) and hedge the bet.

Note:: There may be situations where there is no need to wait for the odds to increase on the opposite bet. If we have learned information that completely devalues our previous bet, we may find it advantageous to bet on the opposite value at unfavorable odds in order to recover at least a portion of our previous bet.

Example:

Before a match between Canada and France, I bet on France to win to a decision at odds of 13.00. Once the match starts and France scores two goals in quick succession, I will place a live bet on Canada to win to a decision at odds of 1.90 to make a profit regardless of the outcome.

If we have put 100 CZK on France to win by decision, then we only need to put approximately 800 CZK on France to win. Whatever happens in this case, we will make a profit of approximately 800 CZK.

Then if you had not hedged the bet, you would have made a higher profit, but again you would not be sure of always winning. And you would actually lose your money in some cases, because no matter how much France leads Canada by three or four goals, there are still situations where Canada will make up the deficit and beat France.

Calculator for calculating the right bet

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For hedging, i.e. for hedging a bet, there are calculators that will calculate the correct amount to the crown. If you do not want to use this calculator, you can only calculate the bet approximately. In doing so, both the initial bet and the hedging bet must be taken into account – a win in both cases should cover both of these stakes and on top of that the required profit. However, this is not a requirement.

The calculator for calculating the correct hedging bet is sometimes referred to as the “Dutch Calculator”.

Should we hedge the bet?

As mentioned above, there are endless arguments on this topic. It all depends on your own preferences – if you like more certainty when betting, then hedge your bets whenever you have the opportunity. If, on the other hand, you prefer higher profits (and higher risk), then forget about hedging your bets.