Hedging

Simon Bates

One of the main reasons I joined BTC was to learn from more experienced traders, that's why I'm always on here asking questions.
So my next question is about hedging, I've heard of it and have a very small idea of what it is, could someone give me an idiots guide in what hedging is and how it can be used in football trading if at all, what are its pros and cons please and does anyone do hedging.

Adam

@Simon-Bates I personally rarely let a bet run, but there's nothing wrong with doing so if you think you have decent value from the bet.

Hedging or partial hedging will remove some or all liability. If you're dripping in your backs then you could drip in your hedge bets as well.

If you want to keep it really simple you could just lay for the exact same stake as you backed, which creates a free bet on that selection (if your selection wins you make a profit, if it doesn't then you lose nothing).

There's no right or wrong answer really, other than ensuring the price is right in the first place, but I wouldn't use the cashout button as you'll never really get a favourable price, as convenient as it is.

Also keep an eye on dangerous match events that could send the price flying if you're betting late in the market.

Simon Bates

@Adam @Martin thanks for both replying, I've been recording data for the members filters, split stake and shg strategy filters since December 23.
I've worked out best leagues and best odds for both filters for shg's.
I'm averaging £5 per winning trade by dripping in my stake as the odds get lower, but every now and then I'll have a trade where there I can see by looking at the stats for the game that there is just no chance of a shg happening, and this is where I can see me losing my stake that's been dripped in, what are your opinions on using hedging to offset my impending loss, would this work, would it lower my loss so I could take a smaller loss or would it be wiser just to cashout and take a loss.

Adam

@Simon-Bates The way it works is you place a bet on the opposing side to offset your original bet. To calculate the amount, you divide the return of your original bet by the current price.

So if you backed at odds of 10.0 for £20 and the odds have reduced to 7.0, you would lay (20 * 10) / 7 = £28.57 and you end up with a gross profit of £8.57 before commission is taken off.

You can confirm your maths is right by calculating the win / lose profit for your selection:

Win:

(Back bet profit - lay bet liability)
((back odds - 1) * back stake) - ((lay odds - 1) * lay stake)
((10 - 1) * 20) - ((7 - 1) * 28.57)
= £8.58

Lose:

(Lay stake - back stake)
= £8.57

The 1p discrepancy is due to having to round the lay stake to the nearest penny.

You can use this basically anywhere, but as you asked regarding football, you might back an unders selection in a game that you think is going to be low-scoring, wait for time decay to do its thing and then lay later at lower odds. You could also do it cross-market, for example backing the current score in the correct score market and then laying the unders in the o/u market.

Martin

@Simon-Bates hedging is another word for 'trading out' you can hedge in different ways but usually it refers to someone cashing out for an equal profit or loss on all outcomes in the market