My main complaint about using the “short-selling” terminology in prediction markets, is that it uses a term from finance that describes a complicated scenario to describe a simple scenario it doesn’t apply to. In financial markets, short selling means that you accrue money in order to take on a conditional obligation. When you bet against a proposition (on InTrade, Foresight Exchange or (I think) Inkling), you spend money and gain a conditional asset. In the prediction market case, you don’t have any further obligation; there’s no possibility of a margin call. The asset has a non-negative value.

I actually think the way NewsFutures describes binary outcomes is the simplest. They never talk about selling unless you already own the asset. If you don’t own any of the asset, you can either buy it, or click a button to see the opposite view, which you can also buy. They don’t have “yes” and “no”, they just have complementary wordings and titles for opposing outcomes.

Go reading all the comments, there.