What is Hedge Betting?

Hedge betting is the name given to the practice of placing bets on the results of sporting events and other financial activities involving a wide range of markets such as stocks, currencies, commodities, and futures. The name ‘hedge’ in this case refers to the practice of protecting one’s assets from extreme price fluctuations by taking long or short positions in the market. For example, a long position in the stock market is called a ‘long stock bet’ and the opposite, a short position, is known as a ‘short stock bet’. These are just two of the many types of bets that can be placed using the services offered by hedge funds and banks.

Decentralized Versus Centralized

Decentralized hedge funds and banks provide their services to individual investors and institutions looking to trade in markets that are not necessarily accessible to the general public. A prime example of this is the use of ‘dark pools’ which are private trading venues that cater to institutional investors. These markets are seen as more reliable than those offered by traditional brokerages due to the lack of any single point of failure, as well as the increased sense of security offered by the increased anonymity.

A Variety Of Betting Styles

Decentralized venues allow for a variety of betting styles to be practiced. The two most common ones are margin and leverage betting. With margin betting, the bettor must deposit a certain amount of money, typically ranging from $100 to $1000, and borrows the remaining money from the broker. In return, the broker will offer much higher betting limits than what is typically available to individual investors. For example, some brokers will allow for up to $50,000 in cryptocurrency to be wagered per day. In a nutshell, margin betting gives the bettor the flexibility to place bigger and more profitable bets without risking their own money too much. Leverage betting, on the other hand, allows the bettor to essentially double or triple their money by combining margin and leverage techniques.

While these two styles of betting are quite popular, there is also an entire section of the markets available for those who prefer to play it safe. For example, if market fluctuations scare the hell out of you and you don’t want to take any risks, you can always play it safe and secure with futures betting. This type of bet gives the player the flexibility to ‘lock in’ the outcome of an event while not risking their own money too much. This was the former Soviet Union before Putin banned gambling, giving rise to the nickname ‘Russia’s last casino’.

Which Type Of Betting Is Right for You?

The most important point to consider when deciding which type of betting to engage in is your own personal comfort level. If you feel secure enough in your knowledge of the markets and you have enough experience under your belt, then you can opt for more adventurous styles of betting, such as put options or long/short equity trading. On the other hand, if you are just getting started and the thought of losing money causes you anxiety, then futures and protective betting are probably the way to go. Even in cases where you are not technically required to do so, the contracts and paperwork involved in margin and leverage betting can still feel daunting to some.