Kraken Leverage: Limits, Fees and How to Use Margin

Kraken leverage: to let its clients take advantage of its multiplier, Kraken has set its leverage between 2x and 50x (subject to conditions). Leverage is a margin trading technique that gives traders the opportunity to increase their investment capital. More precisely, using leverage means borrowing funds on the exchange.

Kraken Leverage by Account Type

Three account options are available for making money with Kraken. The leverage available on Kraken therefore varies according to the features of each account type.

This table summarises the trading leverage offered by Kraken by account type.

It should be noted that leverage increases or decreases depending on the regulatory zone and the rules that apply there.

If this topic interests you, also read “Best Brokers” and “Vantage”.

Leverage by Regulator and by Market

One of the reasons many traders use leverage is its ability to amplify the returns on an investment. On the Kraken platform, you can use this feature to buy more than 5 times as much of a cryptocurrency. However, Kraken’s 5x leverage changes depending on the regulations. These variations also take into account the different pairs that can be traded on margin. The maximum leverage available depends on the currency pair traded. The currency pairs available for trading are:

• • Crypto-crypto pairs
  • Fiat-crypto pairs

• Margin pairs
• Fiat-fiat pairs

Here is a complete breakdown of Kraken leverage by market type for each regulator.

FCA — UK

The FCA (Financial Conduct Authority) is the UK’s financial regulator. All platforms offering cryptocurrency-related futures or options, such as Kraken, are therefore required to comply with the applicable laws. The maximum leverage set by the FCA is therefore 1:2.

AUSTRAC – Australia

In Australia, Kraken is regulated by AUSTRAC, the authority responsible for financial market regulation. Under its restrictions, the cap on Kraken leverage is also 1:2, with a 50% margin.

FINTRAC in Canada

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC, CANAFE in French) is the country’s financial intelligence agency. It also oversees regulations relating to cryptocurrency trading. Because of these restrictions, Kraken offers maximum leverage of 1:3 in Canada.

FinCEN in the USA

FinCEN is the US body that collects and analyses information on financial transactions to combat financial crime. For security reasons, the leverage permitted by this agency is 1:2.

FSA in Japan

The Financial Services Agency (FSA) is Japan’s regulator. It has decided to reduce the cap on leverage permitted on cryptocurrency prices. Leverage on Kraken is therefore set at 1:4 for residents of Japan.

Leverage Compared with Other Brokers

To help you choose, here is a comparison table showing the leverage offered by other brokers.

	Broker	Leverage Offered
	Kraken	This broker offers maximum leverage of 1:2
	Vantage FX	The maximum leverage offered by this broker is 1:500
	Axi	You get maximum leverage of 1:400 on AxiTrader
	Libertex	This broker offers leverage of 1:30
	FXPrimus	Leverage at this broker can go up to 1:500.

The Risks of Leverage

Although leverage can generate large sums of money, it also carries huge risks of loss. If a trader uses high leverage, small moves in the wrong direction can lead to heavy losses.

This feature also tends to fuel impulsive behaviour in investors, who allow themselves to open a multitude of positions. By increasing the number of opportunities taken, the trader then has to monitor every position properly or risk making losses.

Looking more closely, leverage is in reality a platform expedient that misleads many new traders. The people most likely to fall victim to such failure are those with only a basic understanding of how margin trading works.

Despite all the regulations in force, using leverage is still just as dangerous. The principle of leverage is based on borrowing money to make your investments. In many cases, this creates natural pressure on traders, who lose their good judgement and make bad choices.

Before you think about using leverage, it is important to be firmly convinced of the choice you are making. Trading experts also recommend limiting risk through sound money management.

How to Change Your Leverage

• Change initiated by the trader

Leverage can be changed at any time on the Kraken platform, as the operation is instant. However, it is only possible for Intermediate or Advanced accounts, and while creating a new order. To do so, simply open a spot position on margin, selecting leverage between 2x and 5x. If you have any difficulty, there are Kraken leverage tutorial videos explaining the steps to follow.

• Change initiated by the broker

Kraken may carry out checks and decide to change the leverage. The broker has every right to change the leverage on a client’s account. This step is intended to limit the trader’s losses and offer a better client experience. In general, the broker steps in to lower the ratio without having to notify clients.

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When Does Leverage Turn Into a Sledgehammer?

The sledgehammer effect is directly linked to the losses made while trading. When a trader takes a position on the cryptocurrency market, there are two possible outcomes. When the position is closed, they will either have made a profit or taken a huge loss. In leveraged margin trading, losses have a double impact. They affect both the investor’s own capital and the funds borrowed when the order was placed. In these conditions, leverage turns into a sledgehammer because the trader’s losses are multiplied.

How to Trade Without Leverage

Trading without leverage is only possible with “balances”. This term refers to all the currencies available for spot trades without margin. To trade without using leverage, you must hold balances in one currency that you then exchange for another. For example, to exchange USD for XBT in the XBT/USD order book, the trader must hold a USD balance.

Once the trade is complete, the new currency can be used as a balance to buy another one, or simply withdrawn.

Users registered on the platform with the Intermediate and Pro order forms can also trade without leverage. To do so, simply set leverage to “none”. However, they must also have adequate balances to carry out their trades. To place spot exchange orders without margin, simply use a “simple” order.

Which Regulated Broker Should You Choose?

How to Calculate Leverage

Leverage is calculated from the margin percentage. The margin value is defined by each platform and according to the amount of capital. Leverage is determined using this formula.

Leverage = 1/Margin = 100/Margin percentage

How to Set Up Leverage

Only confirmed clients who have completed the verification process have access to margin trading. The higher the verification level, the more money the trader can borrow. To set up leverage on Kraken, simply follow these steps:

• Go to the company’s website
• Enter your email address, a username and a password
• Complete verification of the new account
• Log in to the Kraken platform
• Click the “Trade” tab, then select “New Order”
• Go to “Kraken Pro”
• Choose the crypto trading pair you want
• Open your settings on the right of the screen to make adjustments
• Action: buy
• Type: Limit
• Leverage: choose between 2x and 5x
• Amount and price
• Conditional close order: stop loss or take profit
• Select “Buy”
• The order appears on the left of the screen
• To close the position, select “Settle” or “Close”

How to Use Leverage

Margin trading is a simple operation that any type of speculator can carry out, from beginners to professionals. To use this feature, you first need to select the desired leverage level on the Intermediate and Pro order forms or in the Kraken Pro app. When margin trading, the speculator uses the broker’s funds instead of their own capital to place orders.

When an investor places an order on Kraken with leverage between 2x and 5x, they are requesting a margin extension. This margin is then used to buy or sell cryptocurrencies spot, as specified in the order. Leverage can only be changed from the Intermediate and Advanced order forms on the company’s website.

Before deciding to use Kraken leverage, it is recommended that you understand the following:

• The difference between spot trading with and without margin
• The basic principles of margin trading
• The terms used in margin trading and what they mean
• The categories of currency pairs that can be traded on margin
• How leverage works in spot margin trading

What Are the Costs of Leverage?

At Kraken, using leverage incurs additional fees. Leverage fees, known as opening fees and rollover fees, are a real advantage of cryptocurrency margin trading. Kraken leverage fees amount to up to 0.02% for opening a position and for maintaining it per 4-hour period. This increases the trader’s potential gains and makes withdrawals easier.

Apart from these margin fees, Kraken charges leverage fees that also apply to the various trades made. This charge applies to the opening and closing volume of spot margin positions. On Kraken you can trade cryptocurrencies, and you can trade with eToro leverage on the eToro website.

Have you already used leverage in your trading? Share your experience with the community in the comments!