How To Leverage Trade On Kraken

Kraken is ane of the first The states-based exchanges. It was launched in September 2013, and its margin trading choice was delivered in tardily December 2018. Margin trading allows users to leverage their positions backed by funds that users don’t really possess.

The benefit of this blazon of trading approach is that it can substantially increase profits and take chances a smaller amount of funds. However, it’s also worth noting that it can quickly amplify the losses too.

Leveraged trading allows the user to open up a position which is leveraged than their current balance. The funds used beyond what the user currently has in their account are advanced from Kraken.

Information technology’s important to keep in heed that margin trading is considered high-risk trading, heavy losses tin can exist a consequence if the trade doesn’t go as expected. Therefore, information technology’s very important to sympathize the risks of this type of trading and to seriously proceed with caution.

How to Trade on Kraken Margin Trading

To margin merchandise on Kraken, the user has to get through diverse order types depending on where they think the market volition go. The user can open long or short positions, and they can close them by creating opposite orders or using the settling control.

What Coins Can exist Traded on Kraken Margin and What’s the Maximum Leverage?

One thing that has to exist advisedly antiseptic is which cryptocurrencies Kraken allows for margin trading, and the leverage levels users will be able to work with.

Kraken has unlike leverage levels depending on the cryptocurrency the user decides to merchandise with. Hence, the allowed leverage differs according to the base of operations currency and the quoted currency.

The following shows all the cryptocurrencies currently available for margin trading too as the leverage levels allowed for each one:

Update Oct 2019: Kraken had extended its leverage for up to 50x for eligible traders on Kraken futures.

How to open up a margin position on Kraken

Opening a position happens when the user receives advanced funds (the margin) which will help them execute a leveraged merchandise.

In general, two types of positions can be opened, based on whether the user wants to go long or go brusk.

To open a long position for, permit’due south say ETH/EUR, the Kraken commutation will advance EUR to purchase ETH.

On the other mitt, if the user wants to open a brusk position, they will advance ETH and so the user tin sell it for EUR.

One time logged into the business relationship, the user has to go to the “New Order” tab and and then select “Intermediate” to enable margin trading.

Once there, the following screen will be displayed.

The user will be able to either buy or sell using the given leverage on the right, as shown on the above screenshot. For example, if the user decides to utilise a leverage corporeality of 3, which is 3:1, this will triple their buying ability.

If the user wants to go long, they’d accept to prepare upward a buy order, as in the above instructions.

Next, the user has to gear up up the Gild Blazon. If they determine to go with the market, they need to select “market” from the two types. Yet, if they want to execute the trade every bit the price reaches a certain limit, they’d have to cull “limit”.

How to close a position

As we mentioned previously, when the users are using leveraged margin positions, trades are executed with an advance which is financed by Kraken.

To close a position, the funds which were avant-garde have to be returned to the exchange. To close a position, the user has to create an guild which is opposite to the opened order they desire to close.

In the above screenshot, there is an open long position for Bitcoin. It shows that the guild blazon is “purchase/market place” significant the position is long and picks the best bachelor market club instead of aiming for a certain price limit on the order volume.

To close that position, the user would have to create the opposite trade.

On this screen, the user has to select the “Sell” choice considering the position that has to exist airtight is a “Buy”. They would as well have to choose any type of leverage considering otherwise their funds are sold straight in the all-time bachelor market toll.

Afterward selecting leverage, all the user has to exercise is click on the Sell XBT for EUR button and the position will be airtight, adding or discounting their balance with whatever profit or losses were fabricated with that position.

What is Settling a Position?

Equally explained, margin trading is executed with advances from Kraken. One fashion to close positions is to execute an reverse trade as explained previously.

Still, the second way is if the trader returns the advanced funds direct from his account without involving a trade. That’s called a position settlement.

To settle a long position, for case, here’south what has to be done.

The user needs to select the avant-garde tab on the top menu to create a Purchase Settle Position order.

After that, the user selects the amount they want to settle and any level of leverage. The order type needs to be “Settle Position”. That’southward pretty much all at that place is to it.

The corporeality of cryptocurrency settled is going to exist bought using the specified currency from the user’s account at the price they opened the position with.

How much are the fees for Kraken margin trading?

At that place are two types of fees that the user has to be aware of when it comes to margin trading on Kraken. These are the ‘opening fees’ for opening a position and the ‘rollover fees’ for maintaining a position.

Both of those vary depending on the base and the quote currency. The opening fee is between 0.01% and 0.02%.

The rollover fee, on the other hand, is charged on a 4-hour interval and, once again, is dissimilar according to the cryptocurrency trading pair the user has selected. It varies between 0.01% and 0.02% per four hours.

Conclusion

Margin trading on Kraken can be benign and could enable the user to amplify their gains if the correct trades are executed.  The platform does offer quite a few benefits, simply in that location are also some negatives that have to be factored in.

* Screenshots by Kraken