While using Kraken’s "spot markets" without the use of margin, you must have adequate balances in one currency to trade for another. For example, you must have a USD balance in order to trade USD for BTC on the BTC/USD order book.

After executing a non-margined spot trade between currencies, the corresponding balances are available to be traded again or withdrawn.

When using the Intermediate or Advanced order form, if you select "None" for leverage, then you are spot trading between currencies without the use of margin and must have adequate balances in the specific asset you desire to trade. For most non-margined spot orders, the Simple order form is sufficient.

For more information on non-margined spot market trading, see our introduction to trading on Kraken.

When using Kraken’s markets for spot transactions on margin, so long as you hold sufficient collateral currencies you may buy or sell cryptocurrency through any of the available margin pair order books, even if you do not hold a balance in the specific asset you desire to trade. This is possible because when trading using margin, Kraken extends to you on margin the necessary funds for the entire value of your trade.

By using an extension of margin from Kraken, you incur corresponding obligations and agree to comply with certain conditions until those obligations are satisfied. We refer to those circumstances where you have entered into a spot transaction on margin, but not yet satisfied these corresponding obligations, as an “open position.” Once a position is open, the amount of funds used as collateral are not available for trading or withdrawal until the position is settled or closed. As a result, when you enter into spot purchases or sales of cryptocurrency using margin on Kraken, the assets you receive from the market are reflected in your “positions” tab, which is separate from your “balances” tab. Although reflected in this separate, “positions” tab, when you use margin on Kraken you are using an extension of margin to make an actual spot purchase or sale of cryptocurrency to a counterparty on the Kraken spot market. You own and control the assets you receive in these margined spot transactions and can withdraw them from your Kraken account at any time subject only to our Terms of Service.

Traders can enter “long” and “short” positions by using margin. Entering a long position means you are purchasing an asset you don’t have, in anticipation of the price increasing. You could do this without margin if you use the funds in your balance to purchase it directly. Entering a short position means you are selling an asset you don’t have, in anticipation of the price decreasing. This is only possible with margin, because you are using margin to sell the asset which you don’t already own.

When using the order forms, if you select a level of leverage (2x, 3x, 4x, 5x) you are requesting that Kraken provide you a margin extension for the spot purchase or sale of cryptocurrency as submitted through your order form. Leverage can only be selected from the Advanced order form.

Note: Some pairs are only available for non-margined spot transactions — you will not be able to select leverage for trading on those order books.

For more information on margin trading, see: Leverage and margin.

For more information on whether you are eligible for margin trading, see: margin eligibility.

Exchanging 500 USD in your account balances for 500 USD worth of ETH on the ETH/USD order book.

Posting 500 USD worth of ETH as collateral for a 1500 USD margin extension from Kraken to you, which you use to buy 1500 USD worth of BTC on the BTC/USD order book. This is made possible by choosing 3:1 leverage on the trading pair. Note how the trading pair does not have to match the collateral currency.