Kraken Exchange Review
Kraken is a San Francisco-based Bitcoin exchange that offers special features. Kraken is rated as the best and most secure digital currency exchange by the media. Kraken is the one of the leading Bitcoin exchanges. It offers fast execution, innovative features, prompt support, and high security. Traders around the world are choosing Kraken to buy and sell bitcoins because of the security and high quality service it provides.
Kraken was the first to pass a cryptographically verifiable proof-of-reserves audit. Kraken is trusted by hundreds of thousands of traders around the world, and Germany’s BaFin regulated Fidor Bank.
The San-Francisco-based exchange was also appointed by the Tokyo government as the court-appointed trustee in the MTGox case. Kraken is the largest Bitcoin exchange in euro volume and liquidity, and is a partner in the first cryptocurrency bank.
How to use Kraken:
The Kraken exchange trading platform is all about intuitiveness. The platform offers simplicity and responsiveness as the ultimate forms of sophistication and professionalism. So, it is extremely easy to use the Kraken trading platform.
After signing up for an account you will need to get verified. What is verification? Well, the law requires that every financial company verifies every user account. This is done by asking who you are and where you live. Essentially, you will need to prove who you are and confirm where you live. You can do this by inserting your full name, date of birth, address and phone number. However, this will only grant you access to a basic account which has very low values. Trades who require an advanced account will need to upload government issued ID and proof of residence. In some countries we require SSN (US only) or ID confirmation (Germany or Japan only). You can verify your identity by using the Get Verified Tab.
Making Deposits and Withdraws
After completing the verification process you are clear to trade but for this you will need to fund your account. To fund your account you will need to attach your bank account or credit card. For digital currencies you need to create you wallet address for each digital currency you use. You can do this by using the Funding Tab.
How to trade using the exchange trading features?
To trade the user needs to find the Trade Tab. The trader will then be able to choose between 3 levels of trading: Basic, Intermediate, and Advanced.
Kraken works like a currency exchange where one can exchange currency for another, and a Forex-like market for trading currency pairs. In the currency exchange, traders must have adequate funds in one currency to exchange for another. In currency pair trading, however, traders always open a position in a currency pair with borrowed funds using leverage. Trading short is only possible with currency pairs, so to open a short position you must use leverage. Only currency pairs are officially considered positions, so traders will only see open or closed currency pairs under the Positions Tab.
When using the order forms, if a trader selects None for leverage, it means that he is exchanging currency and that he must have adequate funds to complete the operation. On the other hand, if a trader selects a level of leverage, it means he is opening a currency pair position with borrowed funds. Leverage can only be selected from the Intermediate and Advanced order forms. Note that there can be currency pairs that can only be exchanged – you will not be able to select leverage for these pairs.
Long Position and Short Position
A position is a vehicle for trading currency pairs and does not involve the exchange of any currency in your account. If you select a level of leverage on the order form, then you are creating an order to open a position. Open positions will always end in profit or loss. The profit or loss is only realized when the position is closed with a closing order.
Traders can open a long position. When they buy a security, they will be under the assumption that the security will increase in value. To complete the operation or close the position the trader will need to sell the security.
A trader opens a short position by borrowing and then selling a security. By opening a short position, the trader is expecting that the security decreases in value. The short position is closed by buying the security and returning it to the lender.
How do I trade using leverage and Margin?
Trading with leverage is as easy as toggling a button when ordering to select your desired level of leverage. The leverage options are only available on the Intermediate and Advanced order forms. Please see our Trading Guide for in depth instructions on using leverage and margin.
Margin trading is the margin for a position representing the amount of funds from a user balance which is tied to this same position. Margin is not deducted from the user balance. However, users can’t use the margin amount to open other positions.
By using margin trading the trader is accepting that the funds used to open the position are borrowed funds. You can think of margin as a kind of collateral, set aside from your balance for the loan.
When using Margin, traders need to keep in mind that a loss on the position can be larger than the margin:
If a trader opens a $5,000 long position in XBT/USD with 5:1 leverage; it means his margin for the position is $1,000. But if he later closes this position for $3,000, he will lose $2,000. That would be twice the margin. So, when using margin trading you need to be aware of the risks you are taking.
What are the Fees?
The fee schedules applied by the exchange are tier-based; meaning that the more trading volume in your account, the lower your fee will be on your subsequent trades. User fee volume levels are measured and applicable for trades occurring in the last 30 days only.
Fees are charged on a per-trade basis. It means that by default, fees are calculated from a percentage of the trade’s quote currency volume. User fee volume levels are measured using the equivalent market value of the listed Fee Volume Currency at the time of the trade. This currency may be different from the pair’s base or quote currency. Additional Fees are charged $60/page for paper copies of communications.
In general, Kraken is a professional exchange that offers traditional trading features to traders wanting to invest in digital currency securities.