By opening a spot position on margin*, you incur corresponding obligations, including the obligation to return the amount of the margin extension to Kraken through position settlement and one or more closing transactions.
How settling a position works
You may close all or part of a spot position on margin by transferring to us, directly from your account balance with no trade involved, funds of the type used by Kraken to make the initial margin extension (e.g., if you took an extension of margin from Kraken denominated in BTC, you must have sufficient BTC in your account to settle the position). Upon settling, you retain the asset that you originally received from the market at the time of the position’s opening clear of any restrictions previously associated with your margin obligation. There are no trading fees associated with entering into a settlement transaction. If your account balance is not sufficient to enter into a settlement transaction, you may deposit additional funds into your account. If you have sufficient funds in your account, but they are not of the type used by Kraken to make the initial margin extension, you may execute an order for the type and amount of funds you need to settle the position (e.g., buy 1 BTC of BTC/USD).
Note: if you have multiple positions, they will be settled in the order they were created following the "First in First Out" (FIFO) rule.Let's look at two examples:
- To settle an open “short BTC” BTC/EUR spot position on margin, you must transfer to Kraken the amount of BTC you sold on the market for EUR when you opened the position. This satisfies your obligation to return to Kraken the BTC that Kraken extended to you when you opened the position (i.e., sold the BTC for EUR).
- To settle an open “long BTC” BTC/EUR spot position on margin, you must transfer to Kraken the amount of EUR you used to purchase BTC on the market when you opened the position. This satisfies your obligation to return to Kraken the EUR that Kraken extended to you when you opened the position (i.e., used the EUR to buy BTC).
How to settle a spot position on margin
Position settlement may only be initiated via the Positions widget on Kraken Pro, or through the API. The position settlement must be in the same currency pair as the order that opened the spot position on margin.
- 1From the Positions widget, click on the X located on the right of your position entry.
- 2Then, select the Settle order type.
- 3Next, specify the quantity you want to settle. You may settle a portion of an open spot position on margin if desired.
- 4Lastly, click the large green/red settle button located at the bottom of the form to settle your position.
Suppose you buy 1 BTC of BTC/EUR at 5x leverage (going “long” BTC).
- To settle the entire position, you buy/settle 1 BTC on the BTC/EUR market. This means you exchange EUR from your account balance for 1 BTC.
- To settle half the position, you buy/settle 0.5 BTC on the BTC/EUR market. This means you exchange EUR from your account balance for 0.5 BTC.
Suppose you sell 1 BTC of BTC/EUR at 5x leverage (going "short" BTC):
- To settle the entire position, you sell/settle 1 BTC on the BTC/EUR market. This means you exchange BTC from your account balance for the equivalent EUR.
- To settle half the position, you sell/settle 0.5 BTC on the BTC/EUR market. This means you exchange 0.5 BTC from your account balance for the equivalent EUR.
Settle via API
"Settle" orders work as described in our API documentation under the private user endpoint 'Add Standard Order' (AddOrder) with the "order type" as “settle-position”.
See the entire API documentation here.