Can anyone explain hedge betting on horse races?

Question

I have software that allows me to automatically place a correct hedge bet on a horse race and take a small profit before the race has even started. I have done this several times. Can anyone explain how this works before my head explodes.

Answer 1

Let me try ! In order to hedge profitably you need to both BACK and LAY the same horse. For example you bet £10 to win @ 5/1 on a horse (Bet A). Let's say the price of the horse comes in to 4/1. You then lay it to, say a £12 stake @ 4/1 (Bet B).
If the horse wins you WIN £50 on Bet A and LOSE £48 on Bet B. Nett gain = £50-£48 = £2 PROFIT
If the horse loses you LOSE £10 on Bet A and WIN £12 on Bet B. Nett gain = £12-£10 = £2 PROFIT
Hedging can only guarantee a profit if you can lay the horse at a lower price than you back it.