The standard way of doing drop sets is to simply drop down to a lighter weight once you hit failure. This set extension method increases time under tension and builds muscle.
But you can also do drop sets by changing the range of motion, "dropping" by using a different exercise for the same muscle. Here's an example:
You'll need an adjustable cable column with a (preferably extra-long) rope.
When doing the regular extensions, the point of maximal mechanical tension (where you have the least mechanical advantage) is created in the mid to shortened position. With the overhead extensions, the point of maximal mechanical tension is created in the lengthened to mid-range position.
The point of max tension when doing cable extensions is when your forearm is at a 90-degree angle to the cable. To create a point of maximal tension when your triceps are in the stretched or lengthened position when your arms are overhead, you need the force vector (the cable) to pull almost parallel to your torso.
Since it's very awkward to get set up to do overhead extensions when the cable is set at ankle level, it makes more sense to create the same effect by setting the cable at roughly shoulder-height and simply leaning over and holding your torso parallel to the floor.
So, the first exercise is the most difficult at the point within the range of motion, where the second exercise is the easiest on the lever-arm (moment arm) involved.
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