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 Advanced order form from the New Order page, or through the API.
Order Type
Position settlement may only be initiated through a specific order type, Settle Position. The Settle Position order type is only found on the Advanced order tab from the New Order page. Make sure it is selected.
Pro Tip:
- •To settle a long spot position on margin, use a buy/settle order type.
- •To settle a short spot position on margin, use a sell/settle order type.
Selecting a level of leverage is necessary (e.g, minimum 2x) in order to initiate an order for position settlement. However, the level of leverage selected does not need to match the leverage level you used to open the position. This is because, other than indicating to Kraken’s system that the order you are placing is for position settlement, the leverage selected is irrelevant in a settlement transaction.
Currency pairThe position settlement order must be in the same currency pair as the order that opened the spot position on margin.Specify how much volume you want to settle. You may settle a portion of an open spot position on margin if desired.
Examples
Long
Suppose you buy 1 BTC of BTC/EUR at 2x1 leverage (going “long” BTC).
- •To settle the entire position, you buy/settle 1 BTC and select the BTC/EUR trading pair (at any leverage - the specific level of leverage selected is irrelevant).
- •To settle half the position, you buy/settle 0.5 BTC and select the BTC/EUR trading pair (at any leverage - the specific level of leverage selected is irrelevant).
Short
Suppose you sell 1 BTC of BTC/EUR at 2x1 leverage (going "short" BTC):
- •To settle the entire position, you sell/settle 1 BTC and select the BTC/EUR trading pair (at any leverage - the specific level of leverage selected is irrelevant).
- •To settle half the position, you sell/settle 0.5 BTC and select the BTC/EUR trading pair (at any leverage - the specific level of leverage selected is irrelevant).
Settling via API
"Settle Position" orders work as described in our API documentation under the private user endpoint 'Add Standard Order' (AddOrder) with the "order type" as “settle-position”.
*Availability of margin trading services is subject to certain limitations and eligibility criteria.