# Short Perpetuals

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Short perpetuals are used by traders when they expect to see a decline in the asset price.
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NeoStocks AI offers four different types of short perpetual strategies:

* Trend Following Short
* Breakdown Short
* Counter-Trend Short
* Hedging Short

### Short Perpetual Positions

**Definition:** A short perpetual position is a leveraged contract that allows the trader to profit from price decreases without owning the underlying asset or having an expiration date.

#### How Short Perpetuals Work:

The seller chooses the asset, leverage, and position size for the perpetual contract.

* **Asset:** The cryptocurrency being traded (BTC, ETH, SOL, BNB, ADA).
* **Leverage:** The multiplier applied to the trading position (2x to 20x).
* **Position Size:** Total market exposure controlled by the trader.

The margin requirement is calculated based on the chosen parameters, and the trader deposits this amount in USDC or other supported collateral using their wallet.

Upon deposit, the trader opens the short position and receives immediate market exposure at the current price.

The trader can hold the short position indefinitely as long as margin requirements are maintained.

**Outcome:** If the price of the asset falls below the entry price, the trader profits. If it rises significantly, the position may be liquidated, and the trader loses their margin.

#### Position Management:

The trader monitors the position through the NeoStocks AI interface, tracking unrealized profit/loss in real-time.

**Funding Rate:** Every 8 hours, short traders pay or receive funding based on the perpetual-spot price difference.

The position must maintain adequate margin to avoid liquidation. If the price moves against the trader and margin falls below maintenance requirements, automatic liquidation occurs.

#### Available Leverage and Holding Periods:

* **Leverage:** Ranging from 2x to 20x.
* **Recommended Leverage:**
  * Beginners: 2x - 4x (shorts are riskier than longs)
  * Intermediate: 4x - 8x
  * Advanced: 8x - 15x (avoid 20x due to unlimited upside risk)
* **Holding Period:** Unlimited (no expiration date)
  * Positions can be held for minutes, hours, days, or weeks
  * Funding rates apply every 8 hours (often negative, meaning shorts receive payments)

#### Example:

Market price of ETH: $3,000.

* Trader deposits: $1,500 margin
* Leverage selected: 5x
* Position size: $7,500 (controlling 2.5 ETH short)
* Liquidation price: \~$3,600

**Outcome Scenarios:**

* If ETH falls to $2,700: Profit of $750 (50% return on margin)
* If ETH rises to $3,300: Loss of $750 (50% loss on margin)
* If ETH rises to $3,600: Position liquidated, total loss of $1,500

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### Advanced Strategies

#### Trend Following Short

**Structure:** Entering short positions during temporary rallies within established downtrends and riding bearish momentum.

**Profit Potential:** High profits from sustained bear markets with multiple weeks of downward movement.

**Use Case:** Betting on continued bearish momentum in declining markets.

#### Breakdown Short

**Structure:** Entering short positions when price breaks below consolidation ranges or support with volume confirmation.

**Profit Potential:** Explosive profits from panic selling and momentum acceleration after support breaks.

**Use Case:** Betting on volatility expansion and new downtrend formation.

#### Counter-Trend Short

**Structure:** Entering short positions at resistance levels in ranging or weakening markets expecting mean reversion.

**Profit Potential:** Moderate profits from temporary pullbacks in choppy or topping markets.

**Use Case:** Betting on exhaustion of short-term rallies without strong downtrend conviction.

#### Hedging Short

**Structure:** Opening short perpetual positions to protect existing cryptocurrency holdings from temporary price declines.

**Profit Potential:** Capital preservation during downturns without selling spot holdings.

**Use Case:** Protecting portfolio value during anticipated corrections while maintaining long-term positions
