The Kraken exchange keeps adding some exciting new features as of late. Exchange users can now cash out of margin positions through a position settlement. This new feature not just for people actively using leveraged margin trading, as Kraken wants to make margin trading more appealing.
Kraken Margin Trading Position Settlement
Normally when a leveraged margin position is closed, it is done by executing an opposing order on the open market — a sell order to close a long position or a buy order to close a short position. The opposing order serves to return the funds which are advanced to the trader to open the position. However, the same result can be achieved by returning the advanced funds directly from the trader’s account balance. Now Kraken, one of the few bitcoin exchanges to offer margin trading, has automated this alternative way of closing a position through “position settlement,” which lets users close all – or part – of their margin position by buying or selling at the same price at which their position was opened.
Not everyone in the world will care about this new feature although Kraken strongly feels everyone should take notice of this addition. First of all, position settlement allows any user to lock in a buy or sell price before even depositing the full amount of funds to complete the transaction. Those traders looking to profit from market movements will thoroughly enjoy this new feature as the Bitcoin market is always shifting.
For example, anyone could lock in a price for the sale of their bitcoins, before they are deposited to the account. However, users will need to set up a short position and then settle it by selling their coins at the previously agreed upon price. An attractive option, even for those people who are not actively taking part in the margin trading business.
But there is another benefit to using position settlement on Kraken, as it lets users extend the time of trade compared to a margin position. Long positions can be quite profitable for extended periods of time, but traders have to cut it off at the most opportune time. Now, they can do so by converting the margin position to a Bitcoin balance. And buying the bitcoins at the original position execution price using fiat currency in their Kraken balance.
As one would come to expect from such a potentially lucrative feature, there should be a fee involved. However, the Kraken exchange decided to offer this feature free of charge, as position settlement has nothing to do with open market trading. The only prerequisite is how users need to enable margin trading in their settings.
Source; News Tip Via Email
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