How much does Kraken 5x leverage fall before liquidation

With Kraken's 5x leverage, liquidation occurs when margin level, reflecting equity as a percentage of total position value, falls below 10%.

Nov 12, 2024 at 02:11 am

How much does Kraken 5x leverage fall before liquidation?

Leverage trading is using borrowed funds to increase your potential profit. It can be a risky strategy, as you can lose more money than you initially invested.

Kraken offers up to 5x leverage on certain cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. This means that you can borrow up to 5 times your initial investment to trade. For example, if you have $100, you can trade up to $500 worth of cryptocurrency.

However, it is important to remember that leverage trading can also increase your losses. If the market moves against you, you could lose more money than you initially invested.

How much does Kraken 5x leverage fall before liquidation?

Your position will be liquidated if your margin level falls below 10%. Margin level is a measure of your equity as a percentage of your total position value.

A margin level of 10% is calculated the following way:

Margin level = (Equity / Position Value) * 100

Equity is the current value of your account, including any unrealized profits or losses. Position Value is the total value of your open positions.

Here is an example of how liquidation works:

• You have $100 in your Kraken account.
• You open a $500 Bitcoin position with 5x leverage.
• The price of Bitcoin falls by 10%.
• Your margin level will now be 9%, which is less than the required 10%.
• Kraken will liquidate your position, selling your Bitcoin to cover your losses.

How to avoid liquidation

The best way to avoid liquidation is to manage your risk carefully. Here are a few tips:

• Use stop-loss orders to limit your losses.
• Don't trade with more money than you can afford to lose.
• Close your positions if the market moves against you.

Margin Call

A margin call is a notification from Kraken that your margin level is low and that you need to take action to avoid liquidation.

If you receive a margin call, you can:

• Add more funds to your account.
• Close some of your open positions.
• Reduce your leverage.

Steps to Check Your Margin Level

1. Log in to your Kraken account.
2. Click on the "Funding" tab.
3. Click on the "Margin" sub-tab.
4. Your margin level will be displayed under the "Margin" tab.

You can click on the "Details" link to see a breakdown of your margin level.

Steps to Adjust Your Leverage

1. Log in to your Kraken account.
2. Click on the "Funding" tab.
3. Click on the "Margin" sub-tab.
4. Click on the "Adjust Leverage" button.
5. Select the leverage you want to use.
6. Click on the "Save Leverage" button.

Disclaimer

Leverage trading is a risky strategy. you should only trade with money that you can afford to lose.