Negative risk is Polymarket's mechanism for multi-outcome events where exactly one outcome can win. It lets a NO position in one outcome be converted into YES positions across the others, so a trader who is short every candidate does not need to fund each leg independently.
For strategy purposes it changes the capital arithmetic on multi-outcome markets: the naive cost of shorting every outcome overstates what is actually required, and a model that ignores the conversion will misprice the whole structure.
Costing a short-every-outcome position as the naive sum of the individual NO legs. The conversion mechanism means the real capital requirement is lower, so a model that ignores it will reject trades that are actually available.
Browse the full glossary (32 terms), the strategy database, or the build guides.
