When to use the hedge button?

[Brovashift]

When trading e.g. horse racing, pre off, is the use of a hedge part of the process, used every time, or is it there as a back up option to get you out of trouble?

E.g.
Is the goal of pre race trading to back/lay, let the price ride up/down as much as possible, and lay/backing before the off to lock in profit, only hedging if you find yourself with unmatched orders?

Thanks
Noobie

[andy28]

Hi Noobie, I am far from an espert but my strategy when trading is not to green up until near the off. I just run a simple rule that greens up 10s before the off, no matter if in the green or red. What you don't want to do is get caught with an open position when the event goes inplay, that will lead to disaster more times than not.

I run the rule for 2 reasons, first it safe gaurds me from being caught out and the event goes in play, and second that is my que to move to the next race stopping me from chasing a loss.

I green up every event pre off

[ShaunWhite]

What you don't want to do is get caught with an open position when the event goes inplay, that will lead to disaster more times than not.

It will lead to 'disaster' at almost exactly the same rate as the odds suggest. You'll break even over enough. The problem with going inplay is when people try to exit inplay at terrible prices.

[Brovashift]

Hi Noobie, I am far from an espert but my strategy when trading is not to green up until near the off. I just run a simple rule that greens up 10s before the off, no matter if in the green or red. What you don't want to do is get caught with an open position when the event goes inplay, that will lead to disaster more times than not.

I run the rule for 2 reasons, first it safe gaurds me from being caught out and the event goes in play, and second that is my que to move to the next race stopping me from chasing a loss.

I green up every event pre off

Thanks Andy,

So you hedge every time, as a matter of process, regardless of whether you are in the green or red? What is your P&L looking like from that?

If I example; Back 10mins before the off and lay 5mins later, locking in a profit (assuming price moves in my favour), would I still need to hedge/green up? Because I have locked in profit from that particular horse, whether it wins or not.

I'm sure I am missing something because that sounds too simple lol

[Brovashift]

What you don't want to do is get caught with an open position when the event goes inplay, that will lead to disaster more times than not.

It will lead to 'disaster' at almost exactly the same rate as the odds suggest. You'll break even over enough. The problem with going inplay is when people try to exit inplay at terrible prices.

Thanks Shaun, yes I want to avoid taking it in play as much as possible, even if it means taking a loss.

[Derek27]

Hi Noobie, I am far from an espert but my strategy when trading is not to green up until near the off. I just run a simple rule that greens up 10s before the off, no matter if in the green or red. What you don't want to do is get caught with an open position when the event goes inplay, that will lead to disaster more times than not.

I run the rule for 2 reasons, first it safe gaurds me from being caught out and the event goes in play, and second that is my que to move to the next race stopping me from chasing a loss.

I green up every event pre off

Thanks Andy,

So you hedge every time, as a matter of process, regardless of whether you are in the green or red? What is your P&L looking like from that?

If I example; Back 10mins before the off and lay 5mins later, locking in a profit (assuming price moves in my favour), would I still need to hedge/green up? Because I have locked in profit from that particular horse, whether it wins or not.

I'm sure I am missing something because that sounds too simple lol

Backing or laying a horse and then placing an opposite bet for the same amount is known as closing trade, leaving you with a free bet on that particular horse. Whether you close for free bets or green-up to ensure an equal profit/loss is entirely up to you, it's a matter of personal prefererence. In theory, they should average out and not make much difference.

[Brovashift]

Hi Noobie, I am far from an espert but my strategy when trading is not to green up until near the off. I just run a simple rule that greens up 10s before the off, no matter if in the green or red. What you don't want to do is get caught with an open position when the event goes inplay, that will lead to disaster more times than not.

I run the rule for 2 reasons, first it safe gaurds me from being caught out and the event goes in play, and second that is my que to move to the next race stopping me from chasing a loss.

I green up every event pre off

Thanks Andy,

So you hedge every time, as a matter of process, regardless of whether you are in the green or red? What is your P&L looking like from that?

If I example; Back 10mins before the off and lay 5mins later, locking in a profit (assuming price moves in my favour), would I still need to hedge/green up? Because I have locked in profit from that particular horse, whether it wins or not.

I'm sure I am missing something because that sounds too simple lol

Backing or laying a horse and then placing an opposite bet for the same amount is known as closing trade, leaving you with a free bet on that particular horse. Whether you close for free bets or green-up to ensure an equal profit/loss is entirely up to you, it's a matter of personal prefererence. In theory, they should average out and not make much difference.

Thanks Derek,

I just watched the BA video again here: https://youtu.be/i-w9IG39PjE and I think I did miss something when commenting earlier on in the post above.

I think I am still thinking about things from a matched betting perspective, where to back a horse at higher odds than you lay the horse at means you have locked in profit, regardless of whether that horse wins or not.

In that BA video above, he says that she will only make profit if that horse wins. So like you say backing and then laying is opening a trade and then closing that trade on a particular horse.

No... hang on, sorry, it's gone! I was going to say its just like financial trading, when buying in you open to go long, and you have to take the other side, sell to close out the position. If the trade moved in your favour your profit is the difference between the opening and closing prices.
But in this sports trading scenario; open the trade by backing, and lay to close, but here your horse still needs to win in order to bag the profit?

I know this is a stupid question... but, Why? Why is that green money you've locked in between the back and lay prices still at the mercy of the horse winning?

Because that green money isn't yours yet unless the horse wins, I can see why you would green up to lock in guaranteed profit.

Someone once said to me "there's no such thing as a stupid question". lol

[Derek27]

Thanks Andy,

So you hedge every time, as a matter of process, regardless of whether you are in the green or red? What is your P&L looking like from that?

If I example; Back 10mins before the off and lay 5mins later, locking in a profit (assuming price moves in my favour), would I still need to hedge/green up? Because I have locked in profit from that particular horse, whether it wins or not.

I'm sure I am missing something because that sounds too simple lol

Backing or laying a horse and then placing an opposite bet for the same amount is known as closing trade, leaving you with a free bet on that particular horse. Whether you close for free bets or green-up to ensure an equal profit/loss is entirely up to you, it's a matter of personal prefererence. In theory, they should average out and not make much difference.

Thanks Derek,

I just watched the BA video again here: https://youtu.be/i-w9IG39PjE and I think I did miss something when commenting earlier on in the post above.

I think I am still thinking about things from a matched betting perspective, where to back a horse at higher odds than you lay the horse at means you have locked in profit, regardless of whether that horse wins or not.

In that BA video above, he says that she will only make profit if that horse wins. So like you say backing and then laying is opening a trade and then closing that trade on a particular horse.

No... hang on, sorry, it's gone! I was going to say its just like financial trading, when buying in you open to go long, and you have to take the other side, sell to close out the position. If the trade moved in your favour your profit is the difference between the opening and closing prices.
But in this sports trading scenario; open the trade by backing, and lay to close, but here your horse still needs to win in order to back the profit?

I know this is a stupid question... but, Why? Why is that green money you've locked in between the back and lay prices still at the mercy of the horse winning?

Because that green money isn't yours yet unless the horse wins, I can see why you would green up to lock in guaranteed profit.

Someone once said to me "there's no such thing as a stupid question". lol

Let's say you back for £10 at 8.0 and the price drops to 6.6. You have two options:

1) Lay at 6.6 for £10 (closing) and you have a free bet, £10 x (8.0 - 6.6) = £14, you win this only if the horse wins but lose nothing if it doesn't.

2) Lay at 6.6 for £10 x 8.0 / 6.6 = £11.21 (greening) and you win £1.21 regardless of the outcome.

All you need to do is set the green-up toggle button on for greening or off for closing and then you can click on the ladder to close/green.

[ShaunWhite]

Thanks Shaun, yes I want to avoid taking it in play as much as possible, even if it means taking a loss.

It will mean taking a loss a significant amount of the time. There's no 'even if' about it.

Why is that green money you've locked in between the back and lay prices still at the mercy of the horse winning?

Forget all the fancy terminology and just sit and work out what bets you're actually having, odds and stake, and what each will win or lose. 'Trading' is usually a combination of back and lay bets, not just the back bets you're used to. It's all very will pressing buttons and stuff happening but you need to know the basics about how betting works. Asking questions is fine but you'd have figured it out with a notepad and pen faster than typing the question and waiting for the answers.

[ShaunWhite]

No... hang on, sorry, it's gone! I was going to say its just like financial trading, when buying in you open to go long, and you have to take the other side, sell to close out the position. If the trade moved in your favour your profit is the difference between the opening and closing prices.
But in this sports trading scenario; open the trade by backing, and lay to close, but here your horse still needs to win in order to back the profit?

It's the same. Backing is selling and laying is buying. What you're buying and selling is risk.

[Trader724]

If I example; Back 10mins before the off and lay 5mins later, locking in a profit (assuming price moves in my favour), would I still need to hedge/green up? Because I have locked in profit from that particular horse, whether it wins or not.

I'm sure I am missing something because that sounds too simple lol

You cannot lock in a profit if the stakes you use to open and close a trade are identical. Also
the profit you make is due to your edge but also (or only ) to the normal variance. Although it sounds paradoxical, the most efficient is to choose profits as small as possible so that you do not pay a lot of commission related to the normal variance. So you better hedge when you got a free bet.This way you amplify your edge (if you have it) and minimize normal variance.