To hedge or not to hedge, here is the math and why hedging is a bad idea....

I wish I could be in a position to hedge every week sportsbetting  for the rest of my LIFE. It is not about percentage of profit..but guaranteed  profits. If I make 45% or 40% with no risk, I will take that, than a promise of 100% or more anyday of the week. We don't gamble all the same way. Like the Kelly Criteria is a money management system build for a Perfect world of information the inherent risk of the last game no matter how good the bet is...divides the individuals in this forum into two groups: Investors and Gamblers. I with many years of getting of weird bad beats prefer a smaller guaranteed profit to a Maybe Big Score. Vanzack you're math is dead-on..I disagree with your philosophy of money management.

Canucks, that is a very good post but utility is exactly what Vanzack was talking about. The fact that some people hedge gives them the faulty feeling of "security" of having money in their pocket no matter what.

Vanzack, you have to understand some of these people. Not all of them are responsible enough to build a respectable bankroll first, THEN bet, but are juggling with money initially intended for different use, of course they have to hedge a 4 team parlay.

First of all, a 4 team parlay is a bad idea if that's your only way how to make money. Statistically, you would do better betting singles and putting much less money on that 4 team parlay.
However, if we put that aside, and focus solely on the parlay, Vanzack is 100% right.

The oddsmakers include their MARGINS (bookie margins) in the odds, that's why you cannot get your money back by betting both sides in an ATS kind of bet or three options in 1X2 bets.

Basically, you pay the price. That's because of the juice. If you cover both options, you lose money before the game.

If you don't care about that, and would rather have a few bucks in your pocket "every day", then why not betting -250 favs constantly? The concept of "risk" is smaller there, isn't it? A -250 fav "should win every time", right?

What Vanzack is talking about is MAXIMIZING PROFIT. LONG TERM PROFIT.

Not "profit between tuesday and wednesday", because in that certain period you could lose for not hedging, but if that's your philosophy (not hedging the last game), you will end up winning more.



Vanzack, you also have to understand people don't even care when these games start or finish, they just play the parlay, and think "on the fly", as they follow the games. God bless internet livebetting, they think when they can hedge that last game and go to sleep.

But we're again talking about juggling with funds not intended solely for gambling.

AKA:
betting over one's head.


Some people are so confused when it comes to gambling, almost chaotical. From that standpoint, they surely feel better hedging the last bet than "letting it stand".

Not everyone are doing their best from a statistical and mathematical angle to maximize their profit. In order to do so, you first have to get these psychological inhibitions (which disable you from seeing the whole picture) out of the way.

Things I know for a fact from this thread:

1.  You should never be in a position to hedge, if you are, you have done something wrong.

2.  If you are going to potentially hedge, leave the last game off.  Same risk for the same result, more money.

3.  Many people gambling should not be gambling.  These people just cant comprehend the concepts presented here.  Its not debatable, its math, and its funny how some insist on their opinions instead of inspecting the math. 

4.  Hedging is guaranteeing yourself less money than your position is worth and longterm you will go broke because of it.  I realize that if you are preparing to argue with me on this, you just dont understand it, but it is the truth.  Its called expected value, look it up and just make an attempt to understand.

5.  The fact that so many dont get it and are willing to publicly embarass themselves arguing the point is astonishing.  I absolutely underestimated just how many people dont have the ability to understand simple mathematics.

But I shouldnt complain, it keeps books in business and lines and juice good for those who know how to exploit it, like me.

If someone says 2+2=9, is that a debate?  The premise of a debate is that there is at least a discussion about the validity of both sides.

I am 100% correct here.  Sorry, I know you dont want to hear that, but in my world 2+2=4, and therefore all of the math in this thread and the assumptions made with that math is not debatable.

You might not have the capability to understand, or the time to read this thread, but that doesnt change the facts.

Wow, I read about 20 posts into this and disagreement between Vanzack and Devil made my head hurt. Van is right, no questions asked.

You can't disprove math. It's like arguing Pi isn't 3.14.

This is the part that drove me most crazy. This was probably addressed somewhere in the middle to end of the thread but my head hurt too much to keep reading.

Van made the $1 and $10 coin flip analogy. Devil shot this down because he would never settle for a guaranteed $1 -- it's not that much money.

But what Devil failed to realize is this: IT'S AN ANALOGY.

So using the same analogy, you have this situation:

You have a coin flip. You choose the correct side, you win $100,000. You choose the wrong side, you lose $10,000. You can either flip or get a guaranteed $10,000. You have a 50/50 chance of winning $100,000! Why would you take the $10,000?!

One more point to make and this is the most important one:

I assume we are all (or most of us) individuals who bet consistently and to make long-term money; not a recreational, every once in a while gambler.

If so, then hedging makes the worst sense. If you are doing parlays to consistently win money, then that means you trust that parlays in the future will pay off to negate any current losses. Here's what I'm saying in practice:

Devil kept arguing he wants guaranteed money. God forbid he go to sleep Sunday night with net losses for the day.

Well, if you do the coin flip scenario I just posted, here's what happens: You might lose the coin flip and lose $10,000 on Day X. But if you keep playing the same parlay (same coin flip) every week without hedging, you will win $100,000 half of the time.

So let's say you have this scenario play out 10 times.

Scenario A: You hedge every time for guaranteed money. So after 10 scenarios, you have a guaranteed $100,000.

Scenario B: You let the parlay ride out every time, that is, you flip the coin for $100,000 every time. Half the time, you lose. So these losses total to -$50,000. But half the time you win; so you win 5x$100,000. That's a mathematically guaranteed $450,000!

If you do this over the long haul you will win way more money by not hedging. This is simple math, people!

Dude - go read his latest contribution here.

Devilfan is really becoming an internet legend.  Other boards talk about his posts here as some of the dumbest they have seen.

He is beyond help.  Its like trying to explain to Beetlejuice that the world is round.  Im over it.

i just want to make sure I'm clear on this, the utility curve depends on how risk adverse the person is. If the person is very risk adverse the person will not get the optimal amount paid b/c hedging (risk free) has a cost to it and in the long term you would be lose money  b/c the chances of hitting parlays in the future (or actually having the chance to hedge) are slim or also the expected value is much lower than what you should of gotten by not hedging. It seems very similar to what I'm learning in my portfolio theory class (the optimal portfolio) hahahaha 

 

Devilfan..... you sir are a moron. You say you work in a law firm, who do you fetch coffees for?

Honestly, you make me ashamed to be a fan of the Devs. Logic like that and you should be a Ranger fan yo.

If you would look at the big picture, you would understand that you are guaranteed LESS MONEY.

If you have successful parlays over the long run, it is because you win so much when you win that it cancels out all of your numerous losses. But by hedging the few wins all-out wins that you might have, you are assuring yourself that you will most likely not make enough to offset the losses.

If today was the last day of your life and you had Tony Soprano looking for your head unless you forkover all your money, then by all means, take your guaranteed cash and pay the man. Otherwise, please look at the math. Unless you are an absolute idiot, you will not even argue another side to this because the only other side is the losing money side.

I'm gonna bump this one up for the newbies

Im reading this almost a year later and this made me laugh out loud....