Margin trading will now be available for traders at Kraken as the San Francisco-based Bitcoin exchange, announces the launch of margin trading. In a press release the exchange says that margin is an exciting instrument that allows clients to amplify their trading profits and gain in both up and down markets.
With the latest announcement, Kraken has become one of the few exchanges that allow clients to trade Bitcoins on margin. Nonetheless, within the next few weeks, Kraken will be offering up to 20x leverage which is going to help traders maximize their earning to great extent. Margin trading is available to clients who have verified their accounts to Tier 3 or Tier 4.
The Bitcoin exchange informs that currently margin trading is only available for the Bitcoin-euro currency pair (XBT/EUR). However, it assures that clients can margin trade the XBT/EUR pair using their USD balance. Nonetheless, at launch, Kraken is initially offering up to 3x leverage, meaning that a margined position can gain 3x more than the underlying move in Bitcoin price.
Margin Trading to Help Traders make More Profits
In the announcement, Kraken claims there are several advantages from margin trading; for instance, a 4% gain in Bitcoin price means a 12% gain in a 3x long position. Similarly, according to the Bitcoin exchange, traders can similarly leverage their gains when the market drops. A 4% drop in Bitcoin price means a 12% gain in a 3x short position.
The Bitcoin exchange also informs that opening a margin position is as simple as toggling a button in the order form to select the level of leverage. Also, all the other order details work the same way they do for normal trades, including the many advanced order types Kraken supports. Nonetheless, Open positions are easily closed with an opposing leveraged order.
Kraken informs that if someone goes long 3 Bitcoins with a leveraged buy order, he can close the position by selling 3 Bitcoins in a leveraged sell order. Nonetheless, there is no extra fee for margin trading initially; users simply pay his normal trade fee on the opening and closing volume of the margin position.
In the announcement, Kraken explains:
So if you would normally pay 0.10% for a trade, you will pay 0.10% to open a margin position and 0.10% to close that position. Positions open for more than 24 hours will also be charged a 0.05% renewal fee to keep the position open for the next 24 hours. Traders who wish to avoid this fee should close their position within 24 hours.
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