THE FORMULAS AND MATHS OF HEDGING
TO AN "ALL GREEN" SCREEN

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GET THIS RIGHT AND YOU CANNOT LOSE

Hedge Formulas.
There are 2 ways of calculating Hedge stakes.
The "Green Up" method uses 3 or more stakes but the best way to Hedge uses only 2 stakes.

• The advantage of the Green Up method is that calculations are very straightforward.

• The disadvantages are that it only favours large stakes

• If you use the Green Up method and want to Hedge using small stakes, you will have to mess about in order to place Bets or Lays at less than the minimum £2 on Betfair

• This will involve several more Bets or Lays, which of course take more time, and can also lead to mistakes

The Green Up method.
Bet and Lay the same selection to equal amounts, making sure the Bet odds are bigger than the Lay odds.
Divide the profit by the available Lay odds for an All Green screen.

• Place a Bet in a falling market, or a Lay in a rising market.

• When the odds move in your favour, Lay the same amount in the falling market, or a Bet the same amount in the rising market.

• You now have the equivalent of  a "free" Bet - a win or break even situation.

• Divide that free Bet profit by the current Lay odds to "Green up" for a win/win situation.

Example.
Suppose we bet £10 on a horse at 10.0  (9/1) in a falling market.
The odds then shorten to 9.0  (8/1), so we Lay the same horse for £10 at odds of 9.0.
Win.   If our selection wins, we win £10 x 9.0 = £90 less Lay liabilities of £10 x 8 = £80 = a profit of £10.
Lose.  If our selection loses, we lose £10 on the bet, but have a successful £10 Lay = Break even, profit = Zero.
To green up, we need to divide the "free" Bet profit of £10 by the current Lay odds, and place a second Lay :-
Lay stake to equalize or green up =  £10 / 9.0 = £1.11.

After equalizing (greening up) :-
If our selection wins, we win £10 x 9.0 = £90 less Lay liabilities of (£10 x 8 = £80) + ( £1.11 x 8  = £8.88) = 88.88 a guaranteed profit of £1.12.
If our selection loses, we lose £10 on the bet, but have successful Lays of £10 + £1.11 = £11.11 profit = £1.11.

That is a simple Hedging method, but the big drawback for a small stakes trader is that in order to place your Lay of £1.11, you would then have to mess about Laying less than the minimum £2 on Betfair.

A rising market with a £10 Lay at odds of 9.0 and a Bet of £10 at odds of 10.0 would again produce a Bet profit of £10 for a win and a break even for a lose.
Suppose the Lay odds rise to 10.0.
Divide the £10 win profit by the current Lay odds (10.0), and Lay £1 at odds of 10.0 to equalize your trade for an All Green Screen profit of £1.00 no-matter what the outcome of the event.
In this £10 example, you would need to Lay at less than the £2 minimum.

A better way to Hedge is to use The 2 Transactions Method to complete your Hedge.
This method works with any size stakes, any size odds. and eliminates the need to place Bets or Lays at less than the £2 minimum.
This Hedging method is ideally suited to the smaller stakes trader.

• Place a Bet or Lay.

• When the odds change, place an opposing Bet or Lay, staking to trade out.

Two simple but extremely effective formulas give the stakes required for either a falling or rising market move.
If we Bet first, and the odds shorten, we calculate the stake for our Lay at lower odds.
If we Lay first, and the odds lengthen, we calculate the stake for our Bet at Higher odds.

Example.  Odds shortening.  Bet first, Lay 2nd.
Suppose we bet £10 on a horse at 10.0  (9/1)
The odds then shorten to 9.0  (8/1).
We can Lay £11.11 for a successful Hedge and a guaranteed profit of £1.11 no-matter what the outcome of the race.
Bet = £10 at odds of 10.0
Lay = £11.11 at odds of 9.0
Horse Wins   + £90 less £88.88 lay liability = + £1.12
Horse Loses  + £11.11 successful Lay less £10 losing bet = + £1.11

Odds lengthening.  Lay first, Bet 2nd.
Suppose we Lay £10 on a horse at 9.0  (8/1)
The Bet odds then lengthen to 10.0  (9/1).
We can Bet £9 for a successful Hedge and a guaranteed profit of £1.00 no-matter what the outcome of the race.
Lay = £10 at odds of 9.0
Bet = £9 at odds of 10.0
Horse Wins   + £81 less £80 lay liability = + £1
Horse Loses  + £10 successful Lay less £9 losing bet = + £1

Commission is only payable on profits, so there would be no commission to pay on losing Bets or Lays.
A benefit of this is that a Hedge can be profitable on very small changes in the odds.

If the market moves against you and you have Lay odds higher than Bet odds, the formula to equalize losses is exactly the same, but you will have an all red screen, instead of all green.
In both cases, profit or loss is equalized.

Trade Bookies Free Bets for guaranteed winnings.  This is a Hedge strategy.
Trade a Bookie Deposit and Free Bet correctly, and you can guarantee excellent profits on EVERY trade.
It doesn't matter if you hit all winners, all losers, or something in between.
Also, it doesn't matter if your Bet odds are bigger or smaller than your Lay odds
Stake correctly, and you will win EVERY time.

What profit to expect.
Ask any Betfair trader, and he would be very, very satisfied with a net percentage profit on a normal trade
of  5% to 10%, and if he is honest, he would expect to have losing trades.
When you Trade bookies free bets, you should aim for an 80% profit on your initial deposit from the whole trade, deposit and free bet combined..
Some trades will pay less than 80% of your deposit, but a few may pay more.

Hedge Several Bets on one selection
Suppose you intend placing a series of Bets and Lays to trade to a profit on one selection.
After placing your first Bet or Lay, you can equalize your trade with a single Bet or Lay using the Hedge Your Bets spreadsheet described above, but after a series of Bets and Lays, you would need to know the average odds of your trades in order to trade out with one additional stake.

You can of course set Betfair to consolidate your odds for you, and also set Betfair to show "What if" scenarios.
Then you could juggle your greening up stake to trade out.
Juggling your stakes takes time, and if you are not an experienced trader, it is easy to make a mistake.
Whilst you juggle your stake, the odds may change, so more juggling would be needed.

The spreadsheet below eliminates the need to juggle stakes.
The only inputs required are that you duplicate your Matched Bets and Lays from Betfair onto the spreadsheet, and input odds close to the current odds available on Betfair.
This spreadsheet will then display a range of 16 odds increments and the stakes required at those odds to equalize your trade.
The spreadsheet decides for you whether you need to Bet or Lay, and shows the effect that a range of 16 different stakes at different odds will have on your current position.

If a Bet is required, only Bet odds are shown, with stakes highlighted in Blue.
If a Lay is required, only Lay odds are shown, with stakes highlighted in Pink.
If the odds change, you can decide the size of stake required very quickly, without the need for further input.

Example.  This example uses small stakes, but any size stakes could be used.
A market has Bet odds 2.7, Lay odds 2.68.  You enter those odds on the spreadsheet.
You judge that the odds will shorten, so you offer a £10 Bet at 2.72.
The market moves against your expectations.
Your offer of £10 Bet at 2.72 gets matched.
You enter Bet Odds 2.72 stake £10 on the spreadsheet.

The spreadsheet shows immediately that a Lay is required, and displays a range of odds 2.54 to 2.84, and the Lay stakes required to equalize your trade at any of that range of odds.
The spreadsheet shows a profit of £0.71 for a £10.71 Lay at odds of 2.54 through all increments to a loss of £-0.42 for a Lay of £9.58 at odds of 2.84. 
You decide that the odds may continue to lengthen, so you Lay £20 at odds of 2.74.
Your Lay gets matched so you enter those details on the spreadsheet.
The spreadsheet now indicates that a Bet would be required to equalize.
The spreadsheet shows the Bet stakes required to equalize your trade through a range of odds 2.56 to 2.86.

The spreadsheet shows a loss of £-0.78 for a Bet of £10.78 at odds of 2.56 through all increments to a profit of £0.35 for a Bet of £9.65 at odds of 2.86.  The break even Bet is £10 at odds of 2.76.

You may continue to Bet and Lay.
As you enter your Matched Bets and Lays on the spreadsheet to mirror what is happening on Betfair, the spreadsheet decides for you whether you need to Bet or Lay to equalize your trades, and shows a range of odds and stakes.
The effect that each of those stakes would have on your current market position is shown.

This spreadsheet does not interact with the betting exchange, but is a very good alternative to renting an interactive interface.

Hedge 3 bets.
This Hedge 3 Bets spreadsheet was built specifically for trading the 3 outcomes of the Match Odds market in football matches, but you can use this spreadsheet to Bet and Lay 1, 2, or 3 selections in any market.
The only inputs required are your matched bets, to mirror your matched bets on Betfair, and the current odds.

Hedge to a Profit Target.
As with most other forms of betting, it is possible to win a specific profit from Hedging.
It isn't easy to forecast a market move, and most of us can't even predict which way the market will turn, but if you have your own views, you can trade to a specific profit using a Profit Target Hedging spreadsheet.
The Hedge to a Profit Target spreadsheet available below may be used to work to a staking plan, or to recover lost stakes etc..

Example.
Bet odds stand at 3.1.  You anticipate Lay odds of 3.0.
You would like to make a 2 Tick Hedge profit (3.0, 3.05, 3.1) of £1.
The stakes required are Bet £30 at odds of 3.1, Lay £31 at odds of 3.0.
Win.   £30 x 2.1 = £63, less Lay liabilities of £31 x 2 = £62.  Profit = £1.
Lose.  £31 successful Lay, less losing Bet of £30 = £1 profit.

Bet odds stand at 3.2.  You anticipate Lay odds 3.0.
You would like to make a 4 Tick Hedge profit (3.0, 3.05, 3.1, 3.15, 3.2) of £1.
The stakes required are Bet £15 at odds of 3.2, Lay £16 at odds of 3.0.
Win.   £15 x 2.2 = £33, less Lay liabilities of £16 x 2 = £32.  Profit = £1.
Lose.  £16 successful Lay, less losing Bet of £15 = £1 profit.

I would guess that at the time of writing, January 2008, this calculation is not available elsewhere.
The only inputs required to Hedge to make a specific profit using this spreadsheet are the Bet and Lay odds, and and the amount £ you would like to win.
The number of wagers is 2, a Bet and a Lay.

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