In betting, there is such a thing as hedging. It was borrowed from the stock markets. Hedging means reducing the level of risk, which is made possible by opening trades in opposite markets. This also affects the potential profit, the volume of which decreases accordingly.
In betting, hedging can be used by both active players and fans. The difference is that experienced bettors reduce their losses through hedging, while beginners and non-professionals lose profits. As you can see, the same term can affect rates both positively and negatively.
Example of hedging
Let’s give an example of hedging to better understand it in practice. To do this, let’s analyze the group stage match of the European Championship between Russia and England, which resulted in a draw. The score was 1:1. Before the start of the match, the majority of professional experts were in favor of an unequivocal victory for England. And the first half of the game confirmed these opinions in every possible way. Russia showed itself poorly, scoring only one goal into the opponent’s goal.
- Before the start of the match, bookmakers gave excellent odds for the victory of the English team (1.70-1.80). Let’s say we bet $100 on England at odds of 1.76, and they scored a goal in the 73rd minute. The bet is taking place, but the Russian team at the same time has gathered all its forces and stepped up. Before the return goal, the odds for a draw were 20.00.
- We could have taken a risk and waited until the game was over. But it was wiser to play it safe. To do this, we bet $20 that the Russian team would not lose. The odds for this outcome were 6.00.
- If England had won, our winnings would have been 176-120=56 dollars. A draw would give 120-120=0. That was the insurance.
- In fact, the additional costs in the form of $20 helped not to lose $100 at once. At the same time, if the England team had won, then we could have remained in the black.
Hedging allows you to re-analyze and change your point of view. Sometimes it gives you a chance to win in any outcome of the game. For example, if we had bet $30 on Russia to win, we would still have made a profit regardless of the outcome of the match.
Sometimes hedging is confused with surebets. They do have similarities, but in the first case, we try to reduce possible losses, and in the second case, we expect to win in any outcome.
Hedging should be used in moderation. If you start covering every second bet you make, then the result of such actions will only be additional profit for the bookmaker.