Position Hedging

Hedging with prediction markets involves taking positions that offset risk from other areas of your portfolio or life. If you hold crypto assets, you can hedge by buying "No" on crypto-positive outcomes. If your business depends on a political outcome, take the opposite position on Polymarket to reduce your overall exposure.

Effective hedging requires understanding the correlation between your existing exposure and available prediction markets. The cost of hedging is the expected loss on the hedge position, but this is the price of reduced risk. Calculate the appropriate hedge size based on your exposure and the market's correlation.