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How to Tell the Difference between Scalping and Hedging Betting
In exchange betting many bettors use strategies in order to lower the risk and make more money.
Popular strategies as such are hedging betting and scalping. Though they have different goals and methods, they are often confused with one another. Understanding what these strategies are, how they work and in which ways they differ will help bettors not mistaken them for the same thing and know when to use them better.
What is Hedging?
Bettors use hedging to eliminate the risk factor. They do so by placing additional bets to cover their initial bet. By eliminating the risk, they secure a profit regardless of the outcome of the event.
What is Scalping?
Scalping is a strategy that has the same goal with hedging – to eliminate risk – but is different. Scalping focuses on making small and quick profits. In order to do so, bettors take advantage of minor changes in odds prices in the betting exchange. A scalper places a bet and then as soon as the odds slightly move to their favor they will quickly place another bet in order to lock in a small profit. This can be repeated many times throughout a game as long as the odds prices keep changing.
Key Differences between Scalping and Hedging Betting
Both scalping and hedging betting are all about managing risk and securing profits, but they have very significant differences in their approach and purpose.
Purpose
The purpose of hedging is two-fold. The first goal is to eliminate risk that means to protect against loss. That is why bettors break their bets even. The second goal is to secure a profit. This is why they place additional bets. In contrast, scalping aims at making many small profits. This is the reason why scalpers are trading bets rapidly. Hedging is used when the outcome of the game is not certain and scalping is usually used regardless of the certainty of the outcome and it exploits even small movements in the odds prices.
Risk Factor
Hedging is a less risky strategy than scalping. Bettors place bets on multiple outcomes. This way they make sure they have locked in a profit and the risk of losing money is eliminated. Scalping, on the other hand, is a bit more risky than hedging, because bettors need to rely on the movements of the odds prices. If the odds do not move as expected, a scalper can be exposed and lose money, whereas a hedger does not lose money at all.
Time Frame
Hedging betting is typically used in longer-term positions. As the event goes on and new things are happening, the bets are adjusted accordingly. Scalping is applied on a much shorter frame. The bets are based on the changes in the odds prices, therefore they need to be placed and settled quickly, within minutes or seconds.
Market Focus
In hedging, bettors have already decided on the outcome they want to bet on, but they place additional bets on other outcomes in order eliminate risk and break even or make a profit. In scalping, bettors do not care about the outcome of an event. They only care about how they think the odds will move and place their bets accordingly.
Skill Requirements
In hedging, bettors need to know well the event they choose to bet on and be aware of the various possible outcomes. They need to read well the progress of the game in order to decide correctly about their bets. Scalping, on the other hand, requires a different set of skills. Bettors need to pay close attention to the market movements, they need to be able to decide very quickly and place scalp bets rapidly. At the same time, they need to maintain discipline and patience in order to avoid getting caught up in chasing losses.
Why Are Scalping and Hedging Betting Confused?
Despite their differences, hedging and scalping are often confused. This confusion happens for a number of reasons.
- In both strategies bettors place multiple bets
In both hedging and scalping bettors place multiple bets. However, the reason for placing multiple bets is different. Hedging aims to reduce risk, while scalping strategy aims to exploit short-term changes in odds prices.
- They both aim to lower risk
Both hedging and scalping are risk management strategies and for this reason they are often confused. Hedging aims to eliminate risk directly by covering all outcomes. Scalping does not eliminate risk. It reduces it by making small trade bets, but the loss of money is still a possibility in case the odds prices do not move as expected.
- They both aim to secure profits
Both hedging and scalping are used to lock in a profit. This shared goal can make them seem similar, even though they follow different methods to achieve this goal.
- The betting terms sometimes are used mistakenly
The terminology used in betting can be confusing, especially for a beginner at exchange betting. The term “hedging” sometimes is used very loosely and makes people think it is scalping or other risk management strategies. These strategies are usually discussed together, and this is why the line between them can be blurry.
In Conclusion
Scalping and hedging betting are two distinct methods bettors use in betting exchanges. They share some similarities but they differ greatly in their approach. Hedging strategy aims at eliminating losses and securing a profit, while scalping aims at making small, quick profits from odds price movements. Understanding the differences can help bettors choose the strategy that best suits them at given times. If they prefer cautious bets, hedging is more suitable for them. If they prefer fast-paced betting, then scalping might be a better choice.