Portfolio management for EEA clients

The initial margin and maintenance margin required to open a position starts from 2%, which represents a maximum leverage level of 10x. The margin requirements are raised as position size increases and it is important to keep these values in mind when making calculations.

Complete details on initial margin and maintenance margin requirements can be found in our Margin Schedule.

Portfolio value is calculated separately for each margin wallet by adding the account balance to the profit or loss from open positions held within the wallet:

Portfolio Value = Balance Value in USD + Profit or Loss from Open Positions

This calculation happens in real-time and you can view this on the Balances panel as the market moves.

We calculate the profit or loss from open positions based on our estimate of the current price of the instrument:

For inverse Derivatives, profit or loss is calculated as:

Profit or Loss from Open Positions = ( 1 / Entry Price - 1 / Current Price ) * Position Size

For linear Derivatives, profit or loss is calculated as:

Profit or Loss from Open Positions = ( Current Price - Entry Price ) * Position Size

We continuously update our estimates of current instrument prices based on current spot prices (as given by our real-time indices), and our estimate of the current forward premium or discount:

Mark Price = Index Price + Current Forward Premium or Discount

We calculate the current forward premium or discount as the percentage deviation of the instrument's current mid price from the spot price. The maximum permissible premium or discount is capped at 1% for Derivatives with 1 day to maturity and 20% for Derivatives with 210 days to maturity and is linearly interpolated in between (perpetual derivatives, which do not expire, have a premium cap of 1%).

Note that our estimate of current instrument prices is used only for margin management and does not affect your actual profit or loss once a position is closed out or settled.

Effective leverage is the multiple of the position value compared to the portfolio value of the account, which includes unrealized profit or loss.

This means the leverage amount shown for an open position will change as the price changes because it represents "effective leverage".

Kraken Derivatives collateral margining has three distinct options:

Portfolio Value in the above calculations takes into account unrealised Profit/Loss of open positions. Portfolio value also includes unrealised Profit/Loss from the Funding Rate either being credited or debited throughout the hour when trading perpetual contracts. This changes the trading wallet balance which will also change the effective leverage.

The Portfolio Value calculation uses the index price for valuing each asset.

Portfolio Value = Balance Value in USD + Total Unrealised Profit/Loss in USD

Collateral Value refers to the USD value of balances in the account usable as margin. For Multi-Collateral Derivatives, haircuts apply to non-USD collateral.

Collateral Value = (Balance Value in USD * Haircut)

When the price moves in your favour and your position is in profit, the effective leverage will be lower as the portfolio now has a higher value due to unrealised profit and thus a lower effective leverage ratio. The opposite is also true, when the price moves against your position the effective leverage will be higher as there is now less collateral available due to unrealised loss.

Your position(s) may hit a margin threshold such as maintenance margin. In this case, some or all of your open positions may be liquidated.

Liquidations differ per wallet type, for details, see margining articles below:

NOTE: Removing funds from a trading wallet that has open positions will raise the effective leverage level and may lead to liquidation.

Kraken Derivatives has multiple wallets: