Trading out is the process of placing a bet on the opposite outcome to a bet you have already placed.
It can be used to:
- Lock in a profit.
- Reduce your exposure.
- Cancel out a previously matched bet on the same market.
How to use the hedging calculator
- Select either back or lay depending on what your initial bet on the market was.
- Enter your original stake and the decimal odds you bet with.
- Enter the opposing odds which are now available on your selection.
- Enter the commission for the betting exchange you bet with.
- The hedging calculator will then display the amount you should back or lay to lock in a guaranteed market position, irrespective of the result.
- You can use the slider to partially hedge a market, allowing you to trade out only a set percentage of your original bet.
Example of trading out
You have placed a £10 bet against Arsenal to beat Manchester United at odds of 3.00. Your liability for this bet is £20.
At half time, Arsenal are trailing 1-0 and you decide to trade out of your bet. The current odds to back Arsenal to win are now available at 8.00.
Because the odds to back are now higher than the odds your lay bet was initially placed at, you can trade out for a profit regardless of outcome using the following calculation:
(lay odds * lay stake) / back odds = back stake
In this instance, as the back odds are now higher than the lay price that was taken, placing a £3.75 bet on Arsenal to win with odds of 8.00 would ensure you win at least £6.25 regardless of the result.
A similar calculation can be used to trade out if the initial bet was a back:
(Back price x back stake) / current lay odds
If the market has moved such that you would be backing at lower odds than you layed, or you would be laying at higher odds than you have backed, then you will be locking in a loss by trading out. However, this would reduce your exposure on the initial bet.
By adjusting your stake you will be able to spread the profit/loss over all selections. The projected profit/loss for each outcome will be shown on the left of each market outcome and can be viewed before confirming the bet.
Trade out function on Smarkets
If you want to calculate a trade out quickly, Smarkets now has a Trade out button, which allows users to lock in a profit or cut losses per contract both pre-game and in-play at the click of a button.