A cryptocurrency is a digital asset designed to facilitate peer-to-peer financial transactions and smart contracts on the internet in a decentralized manner.
A fiat currency has no intrinsic value and is established as legal tender by a government. Examples include the US Dollar (USD) and Euro (EUR).
Currency pair (market)
In order to trade one currency for another, there must be a market (also known as a "currency pair") linking both currencies. In a currency pair, the price indicates how much of the quote currency is required to buy one unit of the base currency. For example, a price of 1000 USD for XBT/USD means that 1000 USD is required to purchase 1 XBT.
The first currency in a currency pair is called the base currency. For example, in the currency pair XBT/USD, XBT is the base currency.
The second currency in a currency pair is called the quote currency. For example, in the currency pair XBT/USD, USD is the quote currency.
Minimum order size
Each tradable currency on Kraken has its own minimum order size. An order placed with a volume below the minimum order size will be rejected.
Limit order type
Market order type
A market order will buy (or sell) at the best average market price. All market orders are taker.
A maker (not to be confused with a market order) is a limit order that is not immediately matched/filled with an existing order on the order book. Makers add liquidity to the order book.
A taker is a market or limit order that is immediately matched/filled with an existing order on the order book. Takers remove liquidity from the order book.
Stop loss order type
A stop loss order is typically used as a closing order to limit your losses or lock in your profits on a long or short position. But they can also be used to open a position.
Take profit order type
A take profit order can be used to set a target profit price on a long or short position. The profit price can be set in terms of absolute price, or as a percentage. As with stop orders, take profit orders can also be used to open positions.
Open orders can either be “touched” or “untouched”. An "untouched" open order is an unfilled order. A "touched" open order is an order that is partially, but not completely, filled.
When a stop loss limit’s stop price or take profit limit’s profit price has been met and the order becomes active, the order will be in the new and open order section with the status of ‘triggered’ until the volume is filled or the order is cancelled by the user.
On Kraken Pro the order will be visible in the Orders section with both prices visible.
When trading using the API, you will not see a ‘Triggered’ status. The misc flag would be either ‘stopped’ for stop loss, or ’touched' for take profit.
An order can be "partially" or "fully" filled. To fill a buy or sell order is to match it with one or more orders of the opposing type. Buy orders are filled by matching with sell orders; sell orders are filled by matching with buy orders.
A completely filled order will be listed as "closed".
A cancelled order is an order that has been withdrawn from the order book without being fully filled. A cancelled order will either be untouched or partially filled.
The order book is a list of unfilled buy and sell limit orders. It is used by an exchange to fill market orders at the best available price.
Kraken operates on the Central Limit Order Book (CLOB) style, where orders are matched based on Price/Time priority.
Here's an example:
An order listed on the sell side of the order book
An order listed on the buy side of the order book
The Bid/Ask Depth represents the cumulative volume of buy and sell orders at a particular price. The bid depth at a given price is the cumulative volume of current buy orders on the book at that price or higher, while the ask depth at a given price is the cumulative volume of current sell orders on the book at that price or lower.
The difference in price between the highest bid and the lowest ask on the order book.
The bid/ask spread chart available for Kraken markets only shows the spread between the highest limit buy order and the lowest limit sell order (plotted over time). A market order will fill in this gap if there are matching market orders of the opposing type sufficient to fill it. Otherwise it will fill, at least in part, using limit orders of the opposing type.
Here's an example from the XBT/EUR-market:
A visual representation of the demand and supply at different price levels. The bid/ask depth available for Kraken markets only shows the bid and ask depth of limit orders on the order book.
Here's an example from the XBT/EUR-market:
A term that describes the amount of activity on a market. High liquidity means a high volume of activity in a market where lots of parties are willing to take the other side of a trade.
A market’s volatility is its likelihood of showing rapid and unpredictable price movements.
A sufficient balance in one or more collateral currencies is required to trade on margin. This is because margin trading uses Kraken’s funds instead of your own.
Leverage allows you to place trades in larger amounts than what you have in your trade balance.
For example, a trade balance of 10,000 USD increases your buying power to 50,000 USD when trading on margin and using 5x leverage.
When trading on margin you are using Kraken’s funds to place orders, as opposed to directly using the funds deposited or held in your account.
To create a margin position, you need to select a leverage between 2x and 5x from the Intermediate or Advanced order tab when creating a New Order.
Margin allowance limits
Margin allowance limits determine the maximum amount of margin that can be tied to your leveraged orders for a particular currency. Each currency allowance limit is independent from the other.
Not all currency pairs on Kraken can be traded on margin and each currency limit is independent from the other.