What Is Hedging?
Hedging is placing an additional bet to reduce risk or lock in profit on an existing position. You're essentially betting against yourself to guarantee a positive outcome.
Example: You bet $100 on Team A at 4.00 odds to win a tournament. They reach the final. You can now hedge by betting on their opponent to guarantee profit regardless of who wins.
Hedging isn't always the mathematically optimal play, but it's valuable when securing guaranteed profit outweighs the expected value of letting the bet ride.
When to Hedge
Consider hedging when the potential guaranteed profit is significant, when you need the money, or when your circumstances have changed since placing the original bet.
Parlays are common hedging candidates. If you've hit 3 of 4 legs, hedging the final leg guarantees profit while still allowing upside if the last leg wins.
Calculate both scenarios: What's your profit if you hedge vs. letting it ride? Factor in the probability of each outcome to make an informed decision.
Trading on Exchanges
Betting exchanges let you both back (bet for) and lay (bet against) outcomes. This enables true trading - backing at high odds and laying at lower odds to lock in profit before the event concludes.
Successful trading requires understanding market dynamics and timing your entries and exits. It's more active than traditional betting but can be profitable with practice.