Betfair Exchange: Introduction to Basic Trading Part 2 - Hedging

We’ve already delved into the complex world of Betfair Exchange trading with two trading strategies, and now it’s time to introduce another method: Hedging your bets to guarantee a profit.

Hedging has been one of the main strategies of bettors worldwide for a long time now but it can take a little while to get used to and become a key weapon in your trading arsenal. 

What is Hedging?

Hedge betting is the process of putting bets on different outcomes in an event subsequent to your original wager in order to put yourself in the position where you leave with a profit regardless of the outcome. This is different from arbitrage betting, where you take advantage of differing odds offered by different bookmakers. Instead you use a change in circumstance to ensure the maximum return possible. 

You can use hedge betting on almost any sport, although when events have a large number of participants it can be a little trickier to master. For this example we’ll be looking at tennis, where things are easier to explain. 

You can keep an eye out for all our tennis betting tips over on our Tennis Predictions page.

How to Hedge Bet

We’ll use an example from this weekend, focusing on the final of the ATP World Tour Final in London with Dominic Thiem taking on Stefanos Tsitsipas. Pre-tournament, Tsitsipas was available at odds of 18, with his route to the final by no means guaranteed. He has, however, made it all the way to the final today and takes on Thiem, with the Austrian the 1.87 favourite. 

If you had put £10 on Tsitsipas before the start of the tournament, your £180 return is looking a lot more promising now. However, even at this stage he’s the outsider. could’ve won £180 if he won the competition but, even at this stage, he’s still the outsider with a lay price of 2.14. You have the opportunity to put yourself in a position to guarantee profit and sit back to enjoy the final here. But how?

You’d first need to work out how much you need to lay in order to lock in the profit. There is a formula for this (we’re assuming the standard of 0.5% commission fee on the below):

Initial bet return / Price of the opposite outcome

So in this case:

£180/2.14 = £84.11

This means that you to lay £84.11 on Tsitsipas (betting that he won’t win) in order to ensure profit. There is also a relatively simple way to work out how much profit you’ll have:

Whilst it is quite simple to work out how much you need to wager and how much you’ll earn, there are plenty of hedging calculators available online to make this even easier and ensure a speedy route to maximising your profit whilst eliminating any risk. 

You can, of course, bet on a single match outcome but this involves a bit more speed and technical ability as things move faster and a simple mistake can leave you losing money. Football is probably the best example to use for hedging a single match outcome.

Hedging on Football Matches

Let’s pretend that there is a big FA Cup match coming up between Premier League giants,  Manchester United and mid-table National League side, Barnet. You fancy a big cup upset and find Barnet available at odds of 41 on the Betfair Exchange. You put £20 on them to come out victorious. 

The match starts and Barnet start quickly, scoring twice in the opening 20 minutes. Their price plummets and you can find a price of 7.1 to lay them. You quickly work out, using a hedging calculator, that you need to lay £115.49 on Barnet in order to guarantee a profit of £95.01. You can then watch the rest of the game knowing that whatever the outcome you’ll have profit when the referee blows the full time whistle!

Hedging is one of the best ways to ensure profit coming from a game but takes a lot of practice in order to maximise its potential. When you’ve mastered it though you can really turn things in your favour. We’d recommend starting out with small stakes and getting used to how the market moves before committing more money as, with all betting, there is still an element of risk attached. 

Hopefully this helps you develop your trading skills further but, as always, never risk more than you can afford and keep things fun. Happy trading!

More in this series
What is the Betfair Exchange?
Back and Lay Betting Explained
Advantages of Using the Exchange
Placing a Back Bet on the Exchange
Placing a Lay Bet on the Exchange
How to Set Your Own Odds on the Exchange
Cash-Out – How Does it Work on the Exchange?
Arbing and Matched Betting on the Exchange
Introduction to Basic Training Part 1