Shorting with a perpetual future
In equities, shorting is an ordeal: locate the borrow, pay the fee, live with a recall. With a perpetual future, short is simply the other button, and the mechanics are identical to going long in the opposite direction.
- Live product data
- Self-custodial
- Human confirmed
Why there is no borrow
You are never selling an asset you do not have, because no asset changes hands at all. A perp is a contract on price between two traders, and one of them has to be short for the other to be long. There is nothing to locate, no borrow fee, and no risk of a lender recalling shares at the worst moment.
What it costs to hold
The carry on a short is the funding rate. When the market is net long, funding is positive and shorts are paid to hold, which is a genuine tailwind in an overheated market. When the market is net short, that flips and the short pays. This is the closest analogue to a borrow fee, except it can be negative, and it is paid by other traders rather than to a broker.
The asymmetry that remains
A long can lose everything it put up; a short faces a loss with no ceiling, because a price can keep rising. Leverage compresses the time available to react to that. The specific danger is a squeeze: crowded shorts get liquidated, those liquidations buy, the buying lifts the price and liquidates more shorts. Crowded funding is the clearest early warning available.
- No borrow, no locate, no recall
- Funding is the carry, and it can pay you
- Losses on a short are unbounded in principle
- Squeezes are self-reinforcing: liquidations become buy orders
Shorting things that are not crypto
The same ticket shorts an equity, an index, gold or an FX pair, because the instrument does not care what the oracle is tracking. That is the practical reason perps opened short exposure to assets a crypto-native trader previously had no route to at all.
Sizing a short, and where the liquidation sits
The arithmetic is worth doing before the trade rather than during it. Suppose the asset is at one hundred thousand, you post one thousand dollars of isolated margin at five times leverage, and the maintenance rate is half a percent. The notional is five thousand, the size is nought point zero five units, and the margin per unit is twenty thousand. The liquidation is the entry plus that margin per unit, divided by one plus the maintenance rate: about one hundred and nineteen thousand four hundred, a rally of just under twenty percent. Being early on a short is common, so the useful question is whether the position survives being early.
Frequently asked questions
- Do I need a margin account to short?
- Not in the traditional sense. You post stablecoin margin to a self-custodial wallet and open the position; there is no broker relationship, no borrow agreement and no margin call in the phone-call sense. Liquidation is automatic instead.
- Can I short a stock outside market hours?
- No. Equity and index perps follow the exchange hours of the underlying, because the oracle needs a live reference price. Crypto perps have no such constraint and can be shorted at any hour.
- What is a short squeeze in perps specifically?
- A price rise that liquidates leveraged shorts, where each liquidation is a forced buy that pushes the price further and liquidates the next tier. It is faster than the equity version because the liquidations are automatic and the leverage is higher.
- Is shorting more expensive than going long?
- It depends entirely on the funding rate at the time. In a market with crowded longs the short is paid to hold, which makes it cheaper than the long. Trading fees are identical either way.
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Perpetual futures are leveraged instruments and can lose more than your initial margin. Nothing on this page is investment advice.