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Hedging your bets is a phrase that you often hear, whether you’re a horse race bettor or not. But what exactly does it mean? Learning how to hedge bets can be a game-changer for any avid track bettor. It’s extremely useful knowledge that can help you to decrease your horse betting losses.
In this article, you will discover the ‘hedge your bets’ meaning and how to hedge bets. You can also find further tips on managing your money when you’re betting on horses and useful strategies and knowledge for placing successful wagers.
So “how to hedge bets’? is the question we hear you ask. Hedging your bets is a strategy where you place bets on different horses to reduce the risk of the original wager. When it seems unlikely that the horse you bet on originally will win, you may wish to protect yourself from losses by placing a lay bet. There may also be instances where the odds for the lay bet have increased, so placing an additional bet gives you the chance for an increased profit.
The general rule to hedge your bet successfully is to bet high and wager low on your lay bet. When learning how to hedge bets, it’s crucial to identify the trend of the market movement if you’re going to guarantee a profit regardless of the change in odds.
Hedging your bet is a similar strategy to matched or arbitrage betting. However, for arb or matched bets, the back and lay bets are placed simultaneously. When hedging your bets, you set the lay bet after the initial wager to compensate for changes in the market. That’s the fundamentals of the ‘hedge your bets’ meaning, but let’s dig a little deeper into this horse betting strategy now.
So now you’re likely to be wondering, how can I hedge my bets when I’m playing the ponies?
There are hedging calculators available online. With these, you simply enter the stake and odds of your initial wager, along with the current odds available for a lay bet. The calculator will then tell you how much to place the lay bet at to profit regardless of the result.
However, if you want to be more successful when you hedge your bets, it’s better to understand the calculations fully. Follow these step by step instructions and learn how to calculate your own back to lay hedge bet.
Let’s say that you place $50 on horse A to win a race at odds of 4.66.
During the race, horse A takes an early lead. If you know that the horse has recently failed to maintain leads, you may wish to place a lay bet to protect your wager. Let’s say the lay odds now stand at 4.33.
You first need to calculate how much to wager on your lay bet. The equation for this is as follows:
(back odds x back stake) / lay odds
So for our example, we would have:
(4.66 x 50) / 4.33 = $53.81 This is the amount you would need to place for your lay bet.
The liability for a bet refers to the amount that you’re risking when placing a wager. For a traditional back bet, the liability would be the stake. However, when you hedge your bets, the liability of the lay bet is dependent on the odds. This is crucial when thinking to yourself “how to hedge my bets”.
Calculating the liability of a lay bet is an essential part of learning how to hedge bets. You need to be able to understand how much you’re risking if you make a loss when hedging your horse racing bet. Luckily, there is a simple equation to use when calculating your lay liability.
Liability = (lay bet stake x (lay odds – 1))
Let’s take the values from the previous example.
Liability = (53.81 x (4.33 – 1)) = $179.19
You would need $179.19 available in your exchange account to place this lay bet. This is the liability, so how much you would risk if your lay bet is unsuccessful.
Now you need to work out the profit you would make from hedging your horse bet. There are two possibilities, one for each outcome of the event.
The equation for your profit on a successful back bet is as follows:
Profit = (back stake x back odds) – lay liability – back stake
So for our example it would look like this:
Profit = (50 x 4.66) – 179.19 – 50 = $3.81
The equation for your profit if the lay bet is successful looks like this:
Profit = lay stake – back stake
And with our example values:
Profit = 53.81 – 50 = $3.81
So whatever the outcome of the race, you will guarantee yourself a profit of $3.81.
You should hedge your bet when doing so would allow you to guarantee a profit from the event in question. You can assess this by following the odds and using the calculations you’ve learned. You can also use a hedge bet to reduce your losses after placing a riskier wager or making an accidental bet.
A perfect hedge is a rare instance where the risk of a market position is completely eliminated. However, while perfect hedges reduce 100% of the risk, they will also affect the potential reward.
So back to the question “how to hedge my bets” you’re probably asking. There are plenty of opportunities for hedging your bet in horse racing, due to the multiple betting entries for each event. The most common way is what this article has presented, placing a back and lay bet for a single horse. However, you also have the opportunity to bet on multiple horses to win if better odds come into play. Again, the principle is that the more outcomes you support, the more chance you have for a successful bet. This is another crucial part to proper understanding of the ‘hedge your bets’ meaning.
If you enjoyed learning more about how to hedge bets, then there’s plenty of other horse racing betting guides for you to improve your betting. Once you’ve discovered how to hedge your bets, why not take a look at the arbitrage or matched betting strategy that we mentioned earlier? You understand the ‘hedge your bets’ meaning, so why stop there?
With all the conflicting information out there, perhaps you’d like to know why choosing the best horse racing system a key to success is a key to success, or why you should always seek saver bets each way. We’ll even teach you how to hit the jackpot with a pick 6 in horse racing, and why making an in play horse racing betting strategy pay isn’t as hard as it sounds. You’ll find all this and more in our horse race betting guides.
Once you know how to hedge your bets successfully, you can guarantee a profit on almost every horse race wager you place. This is an excellent way to enjoy the thrills of betting on horses while reducing the risks of making significant losses.
So make sure you remember to be aware of trends in market odds, or the recent performance of the horse you’re betting on. Use the equation or a hedging calculation to work out the correct stake for your lay bet, and calculate your potential profit for each outcome. Now you understand the ‘hedge your bets’ meaning, you just need to wait for the result of the race and enjoy your winnings!