HEDGING YOUR BETS: STRATEGIES FOR MINIMIZING RISK AND MAXIMIZING GAINS

Betting is a great way to combine your love for sports with the chance to earn money. After all, most punters state that having money on the line makes matches even more exciting. Thanks to the influx of bookies available online, such as this Bet365 alternative link, punters have their pick when it comes to where and when to place their bets. But how can you ensure that your bets pay out often? The answer lies in hedging them, as we will explain in this guide.

Why Should You Hedge?

Placing a bet carries risk. Say, for example, that team A is likely to win a match because it has a star player. You might bet on it only for the star player to get injured or disqualified before the match. In that case, the odds would not be in the team’s favor, and the team could lose. Hedging acknowledges this and other risks by allowing you to place a bet that differs from your original one. But why would you want to do this?

–   To guarantee a profit: Good punters place wagers based on research. But the statistics can change at any point. Hedging allows you to change your prior choice to reflect these changes.

–   To mitigate losses: Even where the odds haven’t changed, some bets carry a lot of risk. Hedging allows you to place an alternative bet to ensure you don’t suffer a loss that could affect your budget.

–   To cover accidental bets: Suppose you read the stats wrong or hit submit before you review a bet slip. These mistakes can cost you a lot. Hedging is a great way to avoid the possible negative consequences.

As such, this is an excellent approach to maximize your profits and minimize your losses.

Hedging Strategy

The approach you use to hedge your bets will depend on the desired outcome. For example, someone covering an accidental bet will aim to minimize losses, while someone who is after a guaranteed profit will look at ways to boost their payout. It is also possible to do both. So, what’s the overall strategy?

1.    Place the original wager. We’ll assume that you have placed a bet of $100 on team A to win. Team A has odds of 5.00, and B has odds of 2.00. As such, if A wins, you will get $400 in profits and $100 from your wager.

2.    Hedge the bet: Now, let’s assume you place $200 on team B to win. If it does, you will get $200 in profit and $200 from your wager.

3.    Calculate the profit: If team A wins, you will get $400 in profits minus the $200 spent on team B, leaving you with $200 in profit. If team B wins, you will get $200 in profit minus the $100 wagered on team A, giving you a profit of $100.

4.    Consider the opportunity cost: What happens if you don’t hedge? If team B wins, you will lose $100. Is that a cost you are okay with, or would you rather proceed with the hedge?

If team A wins, you will win big. And if it loses, you will still profit and avoid a loss. Where can you use this approach?

A.   Futures: In this case, the goal is to avoid a potential loss that could result from changes in the odds and stats.

B.   Parlay: You can bet on different outcomes for the final leg to ensure you cover most of the possible outcomes.

C.  Live games: Rather than accept your fate, you can place a different bet as the match ensues to cover possible losses.

As such, you can think of this strategy as some form of insurance that enables you to walk away with something if your initial prediction does not work out. It is a lot like investment diversification, where you don’t put all your eggs in one basket.

 Factors to Consider

While hedging might look straightforward, it does not always cover all the risks. Moreover, it is not always profitable. You should thus consider the following factors before using this approach:

1.    Possible outcomes: Some matches have few outcomes, so hedging is not necessary. For example, if research points to a team having a >90% chance of winning, hedging would likely not bear fruit.

2.    The cost: Since hedging requires you to spend money on several wagers, it can be costly. You must consider your budget and if it can sustain such an approach.

Most importantly, you must conduct a cost-benefit analysis. For example, if hedging might result in a payout of $5, is it worth the trouble? When making this decision, you should consider the work that goes into this strategy and the possible benefits.