What is hedge betting? It is one of the most common questions I get from beginner sports bettors. The most straightforward answer is that you hedge a bet to reduce the risk of losing or guarantee a profit from a bet by placing another bet against it. 

While the concept may seem quite easy, there are basics to learn and steps to go through before you can successfully hedge your bets. 

Let me quickly and simply explain what hedge betting is, how it works, when you should hedge a bet, and its pros and cons so you can start locking in today!

What Is Hedge Betting?

In general, hedging is a risk management strategy that is used widely by experienced investors and traders to minimize potential losses from price fluctuations. 

In gambling, hedging is an advanced sports betting strategy, taking the opposite side of your original wager when things are not going your way. It means whether your first bet wins or loses, you can still come out with some money. It is like buying insurance for your initial wager. 

A key to hedge betting is to understand that you should take the opposite side at different odds. While you can hedge a bet in any market, futures and live bets are particularly common for hedge betting. 

The ultimate goal of hedge betting is to ensure you can win something no matter how the event turns out. While it may not guarantee a profit larger than your initial bet, it helps protect against total loss.

Pros & Cons of Hedging Strategy

Hedging a bet can be a useful strategy in sports betting if implemented properly, but it has its own advantages and disadvantages. Here’s a straightforward look at the top 5 pros and cons of hedge betting:

Hedging Advantages

Risk reduction

Guaranteed profit

Flexibility in placing bets

Protection against unforeseen events, damage control

Lowers volatility and stabilizes overall returns

Hedging Disadvantages

Reduced maximum profit

Complexity & time-consuming

Requires a substantial bankroll

Protection against unforeseen events, damage control

Not always guaranteed 

Potential for mistakes

Types of Hedge Betting

Betting an equal or larger amount on the opposite outcome to completely offset your initial wager is known as a full hedge. 

Partial Hedge is when you place a smaller bet against your original wager. It can minimize potential losses without fully canceling out the original bet.

Examples of Successful Hedging

As mentioned above, you can use hedging in any sports betting market; however, the following are the most common and popular:

Simple Hedge: Suppose you bet $100 on Team Barcelona to win at odds of 1.56. If Barcelona is leading but you’re worried they might lose, you could place a $50 bet on Real Madrid to win. If Barcelona wins, you make money from your original bet; if Real Madrid wins, you still recoup some of your losses. You can easily use simple hedges in live betting. 

Futures Hedging: If you placed a futures bet on Barcelona to win the El Clásico championship earlier in the season and they make it to the finals, you can hedge by betting on the opposing team in the final game, say, Real Madrid. This allows you to secure some profit regardless of which team wins.

How to Hedge a Bet?

To hedge a bet, you should take the following steps:

Do your research and place your initial wager. If you are new to sports betting, learn how to bet on sports properly before placing any bets. For instance, you bet on Germany to win next year's UEFA Euro Tournament. 

Now, you should monitor every event affecting your bet's outcome until the very last moment of the final match. You must keep an eye on any changes that might affect your initial bet, such as injuries, team performance, or shifts in odds.

Along the way, when you see signs that Germany is not going to make it. You can hedge your bet on any team that wins the tournament against Germany. Theer are also a lot of hedging calculators to help you to get the most of your betting.

Wait for the result and the payout. 

When you hedge a bet, there will be three scenarios:

1. Your initial wager loses, and your hedge bet wins. This way, you either break even or secure a profit. 
2. Your initial wager wins, and the hedge bet loses. The same applies to guaranteeing a profit.
3. Both your initial and hedge bets lose. This is quite rare, but if it does, you will experience the next level of pain!

To Hedge or Not To Hedge: That Is The Question

Whether to hedge or not depends on many factors, including your risk tolerance, your gambling budget, the situation, and the value of the hedge bet (odds). 

Remember, when you hedge a bet, you pay the vig or juice for the second bet, automatically decreasing the potential payout. For this reason, deciding whether you should do it or not is quite situational. 

In general, you better NOT hedge a bet in the following situations:

• Parlays: Parlay tickets offer infinite hedging opportunities. If your parlay is about to lose by the last leg, you should wisely weigh the cost and benefit of hedging the last leg. The potential payout from a successful parlay is usually much higher than what you’d gain from hedging. For example, if your parlay involves five teams and four have already won, hedging on the last team could significantly reduce your overall profit without guaranteeing a considerable profit.
• Unfavorable odds: If the odds for your hedge bet are not appealing, meaning you’d have to risk a lot to win a little, or the vig is too high, it may not be worth it. In such cases, the potential losses could outweigh any benefits from hedging.
• Long-term betting goals: If your focus is on growing your bankroll over time, frequent hedging can dramatically limit your overall profits. Statistically, avoiding hedges often leads to better long-term outcomes, as it allows you to take advantage of favorable odds without locking in smaller gains. For those with long-term plans, arbitrage betting seems a more reliable risk management strategy. 
• Emotional gambling: Avoid hedging if your choice is influenced by emotions rather than careful analysis. If you’re feeling anxious about a bet and want to hedge just for reassurance or chase your losses, it might be better to stick with your original wager instead of making a hasty decision that could lead to losses.
• Lack of knowledge: If you don’t fully understand how hedging works, the sport you are betting on, or the specific outcomes related to your bets, it’s best to avoid this strategy altogether. Misjudging potential outcomes or odds can result in significant losses.
• Complex scenarios: In situations with many possible outcomes (like soccer matches that can end in a draw), hedging can complicate things and increase your risk if not executed properly. If the situation feels overly complicated, skipping the hedge is often better, especially for those new to the topic or sports betting. 

When to Hedge a Bet?

Keeping the scenarios where it is better to avoid placing a hedge bet in mind, the following are considered safe hedging situations: 

• Hedge when you want to secure profits after an initial successful wager.
• Place a hedge bet if you feel uncertain about the outcome as the event unfolds.
• Hedge if you want to reduce potential losses from an unfavorable situation.

Final Thoughts 

To wrap up, hedge betting can be a valuable strategy for managing risk and securing profits in sports betting if implemented wisely and properly. Of course, it is not without its challenges. While it offers the potential to minimize losses and provide a safety net, you must carefully consider the associated risks. Ultimately, successful hedge betting requires a balance between risk management and the pursuit of profitable opportunities. 

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