Hedging as Perfect Way to Guarantee Profits

Both in the betting and financial industries, hedging is a key strategy that is applied by professional punters to reduce possible risks and guarantee some profits. The given article will tell you how to use hedging for outright betting.

It is quite difficult to predict a winner of a future event. Even if a name of an obvious favorite is known, outright betting implies that you will risk your entire bankroll throughout the whole event in order to obtain comparatively small winnings. Instead of looking for ways to directly determine an outright winner, it would be better to get acquainted with hedging that will guarantee profit making prior to the end of the event.

General Principles of Hedging

In gambling, hedging represents placing wagers on opposite outcomes in order to create such circumstances that would guarantee obtaining profits despite the final outcome and the result of an initial wager. Those familiar with arbitrage betting that also implies placing two or more bets in order to obtain guaranteed benefits should understand that there is a key difference between the two strategies. The main goal of arbitrage betting is to determine divergence between odds offered by different bookmakers and place wagers on possible outcomes in accordance with the data obtained.

Vice versa, hedging considers changeable circumstances and conditions, and bettors can create only one account with one bookmaker in order to use this strategy. To obtain the highest possible benefits, bettors are recommended to open an account with a bookmaker that welcomes winners.

Hedging Example

Tennis tournaments are the most suitable conditions in the betting world to apply hedging. However, prior to its application, you should familiarize yourself with factors that are crucial to this strategy.

Let us imagine that there is Player A who is an underdog for an upcoming tournament. That is why his chances to win the event are estimated as 35.0, and you want to bet $10 on him to win the whole tournament. If you happen to be right, you will obtain $350. So, Player A is eligible to play in final, but his opponent is Player B who is said to be an obvious favorite, whose chances are estimated as 1.82. Then, it is high-time for you to apply hedging.

To calculate a sum of money that should be staked on Player B, you should divide possible returns from the first bet by odds offered on the second player. Then, we will obtain $350/1.82=$192.3. Now, let us calculate returns for each of two possible outcomes. If Player A wins, your net profits will be $350 – ($192.3+$10) = $147.7. On the other hand, if Player B wins, your benefits will be calculated according to the following formula $192.3 * 1.82 – ($192.3+$10) = $146.7. So, you see that you will obtain almost the same benefits in any outcome.

Adjusted Hedging

The more interesting is the fact that the given strategy allows distributing risk and, therefore, winnings on the basis of your own expectations concerning a given event. For instance, you are almost completely sure that Player B will win, but you do not exclude a possibility of Player A to win. In this case, the stake on Player A should be the same, while that on Player B can be slightly increased to $250.

So, let us see how winnings will be distributed in this case. For Player A, the total returns will stay the same, but winnings will amount to $350 – ($10 + $250) = $90. A different situation will be found with Player B. For him, the winnings will be calculated as follows: $250 * 1.82 – ($250 +$10) = $195.

Thus, you can see that a professional approach to hedging will result in guaranteed benefits despite an outcome.