How to play contracts in Kraken

To play contracts on Kraken, create an account, deposit funds, choose a contract (futures or options), place an order, monitor its status, close your position when desired, and withdraw funds.

Nov 18, 2024 at 03:43 pm

How to Play Contracts in Kraken

Kraken is a popular cryptocurrency exchange that offers a wide range of trading options, including contracts. Contracts are a type of derivative that allows traders to speculate on the future price of an asset without having to own the asset itself.

There are two main types of contracts: futures and options. Futures are contracts that obligate the buyer to buy or the seller to sell a certain amount of an asset at a specified price on a specified date. Options give the buyer the right, but not the obligation, to buy or sell a certain amount of an asset at a specified price on or before a specified date.

Kraken offers a variety of futures and options contracts on a range of cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and Ripple. To play contracts on Kraken, you will need to create an account and deposit funds. Once you have done this, you can start trading contracts by following these steps:

1. Choose a Contract

The first step is to choose a contract to trade. Kraken offers a variety of contracts on a range of cryptocurrencies, so you will need to decide which one is right for you. Consider the following factors when choosing a contract:

• The underlying asset: The underlying asset is the cryptocurrency that the contract is based on. You will need to choose a contract on an asset that you are familiar with and that you believe has the potential to increase in value.
• The contract type: As mentioned above, there are two main types of contracts: futures and options. Futures are more straightforward than options, but options offer more flexibility. Choose the type of contract that is right for your trading style and risk tolerance.
• The expiration date: The expiration date is the date on which the contract expires. You will need to choose a contract with an expiration date that aligns with your trading goals.

2. Place an Order

Once you have chosen a contract, you can place an order to buy or sell it. To do this, you will need to specify the following information:

• The order type: There are two main types of orders: market orders and limit orders. Market orders are executed immediately at the current market price, while limit orders are executed only when the market price reaches a specified level.
• The order size: The order size is the number of contracts that you want to buy or sell.
• The order price: The order price is the price at which you want to buy or sell the contract.

3. Monitor Your Order

Once you have placed an order, you can monitor its status in the "Orders" tab of your Kraken account. You can also set up price alerts to be notified when the market price reaches a certain level.

4. Close Your Position

When you are ready to close your position, you can do so by placing an order to sell or buy the same number of contracts that you originally bought or sold. This will close your position and you will receive or pay the difference between the opening and closing prices of the contract.

5. Withdraw Your Funds

Once you have closed your position, you can withdraw your funds from Kraken by following the instructions on the "Withdrawals" tab of your account.

Playing contracts on Kraken can be a profitable way to trade cryptocurrencies, but it is important to remember that there is also risk involved. Before you start trading contracts, you should make sure that you understand the risks and that you have a trading plan in place.