How to calculate Kraken contract fees

Understanding how to calculate Kraken contract fees is essential for traders to maximize profits and manage risk effectively, considering factors such as contract type, contract value, fee rates, margin requirements, and withdrawal fees.

Nov 07, 2024 at 01:53 pm

How to Calculate Kraken Contract Fees

Kraken, a leading cryptocurrency exchange, offers a wide range of contract trading options for traders of all experience levels. Understanding how to calculate Kraken contract fees is crucial for maximizing profits and managing risk effectively.

1. Determine the Contract Type

Kraken offers two types of contracts: futures and perpetual swaps. Futures contracts have a fixed expiry date, while perpetual swaps have no fixed expiry date and can be held indefinitely. The fee structure for each type differs slightly.

Fees for Futures Contracts:

• Maker Fee: 0.02% of the contract value
• Taker Fee: 0.05% of the contract value

Fees for Perpetual Swaps:

• Maker Fee: 0.01% of the contract value
• Taker Fee: 0.02% of the contract value

2. Calculate the Contract Value

The contract value is the notional value of the contract, which is determined by multiplying the contract size by the underlying asset price. For example, a BTC futures contract with a contract size of 1 BTC and a price of $20,000 would have a contract value of $20,000.

3. Apply the Fee Rate

Once you have determined the contract type and calculated the contract value, you can apply the appropriate fee rate to determine the trading fee. In the above example, if you were a maker opening a BTC futures contract with a value of $20,000, the maker fee of 0.02% would be applied.

Fee = Contract Value * Fee Rate
Fee = $20,000 * 0.02% = $4

4. Account for Margin

When trading contracts, traders typically use leverage to increase their potential profits. However, leverage also increases the amount of margin required to open and maintain a position. The margin amount is the collateral that a trader must deposit into their Kraken account to cover potential losses.

Margin requirements vary depending on the contract type and the amount of leverage used. Kraken provides a margin calculator on its trading platform to help traders determine the margin requirements for specific contracts.

Fees for Margin Trading:

• Margin Funding Fee: 0.01% per day of the margin loan value
• Margin Borrowing Fee: Varies based on the interest rate of the asset being borrowed

5. Add Withdrawal Fees

If you plan to withdraw your profits or underlying assets from Kraken after closing a contract, you may incur withdrawal fees. Kraken charges withdrawal fees based on the cryptocurrency being withdrawn and the withdrawal method used.

Withdrawal Fees:

• Bitcoin (BTC): 0.0005 BTC
• Ethereum (ETH): 0.005 ETH
• USDT (TRC-20): 1 USDT
• USDT (ERC-20): 15 USDT

Additional Considerations

In addition to the fees outlined above, traders should also consider the following factors when calculating Kraken contract fees:

• Volume Discounts: Kraken offers volume discounts to traders who trade a high volume of contracts. The discount rate is tiered and decreases as trading volume increases.
• Referral Program: Kraken offers a referral program that allows traders to earn discounts on trading fees by referring new users to the platform.
• Kraken Pro: Kraken Pro is a professional trading platform offered by Kraken that provides lower trading fees and advanced trading tools.