What is closing a position and how do I do it?

Margin trading involves borrowing funds, and thus to wind down a margin position you either need to settle it or close it (described here).

How closing works

You can close a position by executing an opposing leveraged order for the same volume as your opening order (a sell closes a long and a buy closes a short). This returns the borrowed funds back to Kraken, and any profit (or loss) is added to (or taken from) the you account balances.

Note: If you have multiple positions, they will be closed in the order they were created following the "First in First Out" (FIFO) rule.

Closing instructions

Just like an opening margin order, a closing order needs to use the Intermediate or Advanced order form.

Leverage: The closing leverage amount does not need to match the opening leverage amount, but it does need to be a leveraged order (i.e. minimum 2x) to close a position. So if the opening position leverage was 5x, then the closing position leverage can be 2x/3x/4x/5x.

Currency pair: The closing order must be in the same currency pair as the opening order.

Amount: Be careful not to execute a closing order for more volume than your position, since this will create a new leveraged position on the opposite side (unless this is what you want to do).

Examples

Closing a long position

Suppose you buy 1 XBT of XBT/EUR at 2:1 leverage (going “long”).

To close the entire position, you need to sell 1 XBT of XBT/EUR (at any leverage).

To close half the position, you need to sell 0.5 XBT of XBT/EUR (at any leverage).

To flip the position, you need to sell 2 XBT of XBT/EUR (at any leverage - the leverage amount will apply to the new position and determine the collateral withheld)

Closing a short position

Suppose you sell 1 XBT of XBT/EUR at 2:1 leverage (going “short”).

To close the entire position, you need to buy 1 XBT of XBT/EUR (at any leverage).

To close half the position, you need to buy 0.5 XBT of XBT/EUR (at any leverage).

To flip the position, you need to buy 2 XBT of XBT/EUR (at any leverage - the leverage amount will apply to the new position and determine the collateral withheld)


An alternate way to close the position is to return the advanced funds directly from your account balance with no trade involved — this is called position settlement.