The world of sports betting is a fast-paced one. New forms of wagering pop up on social media nearly every day, leaving followers wondering exactly what type of betting they should be doing. Thanks to Twitter and other social media accounts, followers can quickly find out what types of betting events they should be participating in, but discovering which betting strategy to follow can be difficult. If you’re wondering exactly what is a hedge in betting, then this article will introduce you to the concept and provide you with an easy-to-follow guide on how to utilize it. Let’s get started.
What Is A Hedge?
A hedge is generally defined as “a security or commodity that is used to hedge or protect a position in something else,” according to Investopedia. Essentially, it’s a way of speculating in a way that limits your risk. For example, if you believe that the prices of gold and/or silver will increase in value over time, you can use a hedge to lock in that value. If the price of either metal drops, however, you’ll lose money because the hedge has lowered your overall investment amount. The same concept applies when placing a wager on a game. Say you believe that the over/under for a particular team will be higher than the posted line when the game starts. You can use a hedge to limit your risk, backing your hunch with money that will be repaid if your guess is wrong. In the event that your guess is correct, you’ll gain the money you’ve invested. Of course, there’s no guarantee that your investment will be repaid in this case. It all depends on the risk you’re willing to take.
Why Use A Hedge In Betting?
Well, as we mentioned above, using a hedge in betting puts your investment at a safe distance from the action. Say you’ve got a hunch that the over/under for a given team will be close to a particular number when the game starts. If you don’t want to risk losing your investment on one play, you can back your hunch with a hedge. If your guess is correct, you’ll gain the money you’ve invested. If your guess is incorrect, however, you won’t lose a penny, as the hedge will limit your losses to the amount you’ve risked. Essentially, it’s an easy way to reduce your risk in a profitable way. If you don’t believe that hedging will be profitable for you, then you should probably avoid using it. It depends on your needs and your situation.
Types Of Hedges
Not all hedges will work the same way or for the same reasons. For example, a long-short position is when you purchase a security or commodity, intending to sell it at a later date, usually at a lower price. An inverse long-short position is the opposite of a long-short position – in other words, you’ll be purchasing a security or commodity with the intention of selling it at a later date, usually at a higher price. A straddle is when you purchase a security or commodity, intending to neither buy nor sell it at a particular moment in time. A strangle is similar to a straddle, but it also includes the purchase of a call option, which gives you the right to buy a security or commodity at a certain price by some date. For example, you might want to purchase a call option for a stock that you think will go up in value over the next few months. This allows you to profit from any rise in price, while limiting your losses in case the stock market tanks.
Using Hedges To Profit In Betting
The advantage of using hedges in betting is that you can limit your losses. If you follow the right strategy, you can use hedges to make money when the stock market is rising and falling, providing you with some extra security to use in your wagers. Say you’ve got a hunch that the dollar will drop in value against major fiat currencies over the next few months. You can use a long-short position in the dollar, purchasing it in small amounts on the way down and selling it in small amounts on the way up – this will make you dough in both up and down markets. You might want to limit your losses on this play by using a combination of the 3-bet and reverse ratio stacking, which we’ll discuss below.
The 3-Bet And Reverse Ratio Stacking
The 3-bet is a way of placing a wager on two games simultaneously, limiting your losses if one of the games ends in a tie. For example, you could place a 3-bet on the game between the New York Yankees and Boston Red Sox, along with a +100 wager on the over/under for both teams’ combined scores. In this case, you’ll be risking $110 on a winning Yankees’ play, along with a winning Red Sox play, making your total profit $220 (minus your $110 loss on the 3-bet). This will give you a winning percentage of 33%. Three bets on a single game provides some great flexibility in terms of reducing your odds of losing money, as long as you stay within the right limits. This particular strategy is popular among experienced bettors who want to reduce their risk while enjoying the thrill of the game.
How To Place A Winning Hedge Bet
Once you’re familiar with the concept of placing a hedge bet, it’s easy enough to place a winning one. Simply follow these steps:
- Decide which sports you want to bet on
- Locate the corresponding odds, either by searching online or by asking a sportsbook representative for help
- Determine how much you want to risk per game
- Find the best strategy for you
- Research news articles relating to your chosen sports
- Review previous games and form an opinion on what might happen
- Make your wagers!
It’s important to note here that if you want to place a successful hedge bet, you need to have a solid understanding of the odds for each game. Without them, it’s impossible to know whether or not your wagers will pay off. Fortunately, you can usually find the odds for virtually any sporting event online, making it easy enough to stay abreast of when and where your money is going.
Now, some people might argue that betting on sports is too much work. After all, you’re not going to be able to watch every game, and you might miss some that are outside of your region. To counter this, we recommend that you follow the advice of the old adage, “Know thy enemy.” You can use this to your advantage by getting to know which teams are most likely to call for a hedge, as this will help you place better wagers. For instance, if you know that the Los Angeles Dodgers are a team that typically needs help against left-handed starters, you can place a bet on them when they’re playing a left-handed starter, but you should avoid going on the opposite end of the spectrum and putting money on a team that’s usually handled by right-handers.
Make Sure You Practice Risk Reduction
Even though using hedges in betting can reduce your risk, it doesn’t mean that you don’t have to be attentive to your financial situation. After all, as we mentioned above, if you use a hedge and lose, you’ll lose money – it doesn’t matter whether or not you follow a winning strategy. This is why it’s important to practice risk reduction and make sure that you’re not overextending yourself financially. Simply follow this guideline:
- Only bet what you can afford to lose
- Monitor your spending habits
- Look for opportunities to reduce your risk
- Take profits, where you can
- Only place 3 bets on a single game, if you’re able to
- Stay within your budget
- Consider all of your options
- Learn from your mistakes
- Do your research
- Have fun!
If you practice following these guidelines, you’ll be able to reduce your risk while enjoying the thrill of the game. Not only that, but you’ll also be able to take advantage of any opportunities that present themselves – you can’t lose if you follow the right strategy. This, in turn, will make you a far more successful sports bettor. So, don’t be afraid to try out this incredible strategy, as it can and likely will make you money in the long run.