Sports Betting Hedging Simplified

When engaging in investments, even in sports betting, it is important to know the basic terminologies involved. One important term to remember in sports betting is the word "hedging". Hedging is described as preventing or offsetting the probability of a loss in the price of commodities or securities. It is also used in protecting ones' interests against untoward effects of odds fluctuation.

In the sports betting world, hedging successfully works by laying a wager on both sides of the equation. It balances the odds of winning and puts the individual in a more secure position. However, this is not effective for even bets. This strategy is ineffective because one wins on one side with the same amount one loses on the other. The end result is a breakeven, which is a fate as worse as losing in a bet. To hard core gamblers, this is a taboo for it takes away the excitement and defeats the purpose of gambling.

In order for sports betting hedging to work, one must first determine the nature of the wager. If it the odds are on or against, then hedging is the technique that will come into play.

To further elaborate how hedging works, here's an example on how to understand it in much simpler terms. Imagine betting $20 in a sporting event wherein the odds are at 5:1. If you place a bet on Team A, you win $100 ($20x5) and if that team loses, you only lose $20 which is your initial investment. How does one hedging work for this bet? You can do so if, for example, the odds for Team B are 2:1 If you place a bet of $50, you will win $100 as well but if they lose, you'll lose $50.

At this point, a question pops in your head asking, why risk losing $20 over Team A and lose $50 on the other team? Gambling is supposed to be calculated over winnings not losses. Here's why: If Team A wins, you will earn a profit of $80 and lose $50 for betting on Team B and your net profit for this hedging is $30. On the other hand, if Team B wins, you will earn a profit of $50 and lose $20 over your bet for Team A and your net gain over this hedging is still $30.

Through this strategy, the end result is a $30 profit. One wins the same total amount, no matter what. And with such results, it is not a bad win either. What is important here is that, in the end you make a profit, instead of just betting on one team and hoping that the odds would translate the outcome of the game.

Although the example given above is a very elementary illustration of how sports betting hedging works, it can be a quite useful guide especially for those who are new to the world of sports betting. The computation varies as the odd changes; however, one should bear in mind the most fundamental rule in hedging: it only works on uneven bets. Careful calculation and thoughtful consideration of the odds are also supplemental skills needed in order to succeed in sports betting hedging.