Kraken contract trading introduction

Contract trading on Kraken enables traders to speculate on cryptocurrency price movements without owning the underlying assets, offering leverage (up to 50x), short selling capabilities, and hedging opportunities.

Nov 11, 2024 at 10:08 am

Kraken Contract Trading: A Comprehensive Guide

What is Contract Trading on Kraken?

Contract trading on Kraken is a derivative trading method that allows traders to speculate on the future price movements of cryptocurrencies without owning the underlying assets. Traders enter into contracts with Kraken to bet on whether the price of a cryptocurrency will rise or fall.

Benefits of Contract Trading on Kraken:

• Leverage: Contract trading allows traders to use leverage up to 50x, magnifying potential profits. However, it also increases the risk of losses.
• Short Selling: Traders can bet on the price of a cryptocurrency declining by entering into short contracts. This is not possible with traditional cryptocurrency trading.
• Hedging: Contract trading can be used to hedge against price fluctuations in the underlying cryptocurrency, reducing portfolio volatility.

How to Trade Contracts on Kraken: A Step-by-Step Guide

Step 1: Create a Kraken Account

• Visit the Kraken website and click "Sign Up."
• Enter your email address and create a password.
• Follow the on-screen instructions to complete the registration process.

Step 2: Verify Your Identity

• Kraken requires all users to verify their identity before trading contracts.
• Submit a government-issued ID document (passport, driver's license, etc.).
• Provide proof of residence (utility bill, bank statement, etc.).

Step 3: Fund Your Account

• Kraken supports multiple funding methods, including cryptocurrencies, fiat currencies, and third-party payment providers.
• Choose your desired funding method and follow the instructions provided.

Step 4: Open a Contract Trading Account

• On the Kraken dashboard, click "Trade" and select "Contracts."
• Click "Open Contract Account" and follow the on-screen instructions.

Step 5: Choose a Trading Pair

• Kraken offers a wide range of cryptocurrency trading pairs for contracts.
• Select the trading pair you wish to trade, such as BTCUSD or ETHUSD.

Step 6: Enter Contract Parameters

• Set the contract size (quantity) you wish to trade.
• Select the contract type (long or short).
• Enter a limit price (optional) to define the maximum or minimum price at which the contract will be executed.

Step 7: Place Your Order

• Review your contract parameters and ensure they are correct.
• Click the "Buy" or "Sell" button to place your order.

Step 8: Monitor Your Contract

• Once your order is executed, it will be visible in your "Positions" tab.
• Monitor the contract performance and adjust your strategy as needed.

Step 9: Close Your Contract

• When you are ready to exit the contract, click "Close Contract" in the "Positions" tab.
• Select the desired closing price and confirm the transaction.