Wrongful futures liquidations on Kraken

[termtrader]

On May 1st I had the misfortune to have a large position liquidated in September BTC/USD multi-collateral futures on Kraken. The markets (looking also at other relevant term, spot and perpetual markets) were very quiet, and I found out that the reason was a volatile behavior of Kraken's mark price. The mark price follows the midpoint of the bid/ask spread. At some point the market makers stopped quoting, the bid/ask spread became almost 30% wide and the mark price plunged by more than 10% in two minutes causing my liquidation.

I wonder if people had similar experiences on Kraken. While it is not a pleasant subject to discuss for anyone affected, if enough people come together, we may be able to exert some pressure on Kraken to compensate losses and improve their mark price methodology.

[Oshosondy]

This was common on exchanges before. I have seen it on Binance and many other exchanges before. Some exchanges may even compensate the losers but there are many cases there would be no compensation.

This is one of the reasons high leverage is not good. The price will later get back to normal after some seconds or minutes.


See the one that I saw recently, but it is about Paxos Gold in derivative market on Bybit



Paxos Gold price has not been up to $2550 before but it went up within some minutes to over $3440 on Bybit derivative market few weeks ago.

I see this often on all the exchanges that I am using.

[AmoreJaz]

This was common on exchanges before. I have seen it on Binance and many other exchanges before. Some exchanges may even compensate the losers but there are many cases there would be no compensation.

This is one of the reasons high leverage is not good. The price will later get back to normal after some seconds or minutes.

See the one that I saw recently, but it is about Paxos Gold in derivative market on Bybit
---
Paxos Gold price has not been up to $2550 before but it went up within some minutes to over $3440 on Bybit derivative market few weeks ago.

I see this often on all the exchanges that I am using.

This can indeed easily liquidate your position in futures. If you are not ready for such situation, better put money in futures that you feel you are ready to lose. As it can happen in any exchange, you need to look out for your funds. If you try to file a complaint, I don't think it will go anywhere. Better get out of futures and maybe, just look for opportunities in spot trading. The exchange for sure have their answers ready for this kind of complaint. And most of the time, the complaint will not go anywhere. You will find out that you are just wasting your time on this type of complaint. Such scenarios are common in futures. Better be careful in dealing with this type of trading. As I said, many are getting liquidated in their position.

[Oshosondy]

If you are not ready for such situation, better put money in futures that you feel you are ready to lose. As it can happen in any exchange, you need to look out for your funds.

The traders that uses low leverage will not be affected because the price will go back to normal in few seconds or some minutes. But it can be disturbing for scalpers and those traders that are using high leverage. Generally high leverage is not even good.

[logfiles]

Happened to me on bybit some years ago, My entire position got liquidated within seconds because bybit's mark price was way off the spot index price at that time. During those days, bybit was just still under constant development. I wrote to the team about the issue and got compensated. They also improved on how the liquidation engine works plus the calculations for their Mark Price.

[shinratensei_]

happened many time with other exchanges too, there were also stories about some people that make future trade in other exchange who were finding out that their long/short position got inverted by the exchange out of nowhere causing liquidation.

since it involves the safety of our position in the future market, honestly exchanges should really look into this, getting liquidated because the price mark acting strange is the lamest way of losing money ever.

[termtrader]

I am glad that in some cases the exchange was willing to make amends. In my case, I did some research to show that the mark price movement was not warranted by any market action. In its reply Kraken completely ignored this, and said that the leverage in my position was the only reason for the liquidation. Looking at the market data I know that this problem is pervasive at Kraken. I see other cases where mark price instability caused liquidations. But apparently, they want to ignore it.

[nelson4lov]

~Snipped

I wonder if people had similar experiences on Kraken. While it is not a pleasant subject to discuss for anyone affected, if enough people come together, we may be able to exert some pressure on Kraken to compensate losses and improve their mark price methodology.

I haven't traded on Kraken for a long time. Iirc it was during the time Bittrex was the #1 exchange. But yes, I have experience a similar issue with Binance but it doesn't happen often. Whenever the market gets very violent with swings, I think that's when issues like this usually occurs. In my case, I got liquidated even though the price hasn't reached the SL price I had set out before the trade.

This issue has been happening for a while now, been seeing users over the last year complaining about it.

[X-ray]

I am glad that in some cases the exchange was willing to make amends. In my case, I did some research to show that the mark price movement was not warranted by any market action. In its reply Kraken completely ignored this, and said that the leverage in my position was the only reason for the liquidation. Looking at the market data I know that this problem is pervasive at Kraken. I see other cases where mark price instability caused liquidations. But apparently, they want to ignore it.

future market provided by some exchanges in general are so full of inaccuracy, there are many exchanges that don't have accurate liquidation mark and as a result if you don't set SL and is really tight in margin funding you might get liquidate well above the supposed liquidation mark.
been to few crypto exchanges, all the same, at this point I think the fairest game is always with spot, since there's no such thing as liquidation they can't do something funny.