What is settling 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 close it or settle it (described here).

How settling works

Settling a position repays the borrowed funds directly from your account balance without having to place a closing trade in the market. Upon settling, you acquire the asset that was originally received from the market at the time of position opening.

Settling allows you to exit your margin position at the original opening price and with no trading fee.

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

Let's look at two examples:

A long XBT/EUR position is opened by Kraken advancing (lending) you EUR to buy XBT from the market. To settle the position, you must hold enough EUR in your balances to cover the EUR cost (XBT volume x price) of the opening order. Upon settlement, you will acquire the original XBT volume.

A short XBT/EUR position is opened by Kraken advancing (lending) you XBT to sell for EUR from the market. To settle the position, you must hold enough XBT in your balances to cover the XBT volume of the opening order. Upon settlement, you will acquire the original EUR cost (XBT volume x price).

Settling instructions

Position settlement is executed with a special order type that is only found in the Advanced order form (as “Settle Position”) or through the API (as “settle-position”).

  • To settle a long position, use a buy/settle order type.
  • To settle a short position, use a sell/settle order type.

Examples

Settling a long position

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

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

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

Settling a short position

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

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

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

Settling via API

Settle Position orders work as described in our API documentation under “Add standard order,” with the order type as “settle-position”.

See the API documentation here: https://www.kraken.com/help/api#private-user-trading