[ANN] KRAKEN.COM - US-based Exchange w/ Margin Trading - OPEN BETA

[epetroel]

In light of more recent events, hurry the krak up!

+1, the gox is on their knees, release the Kraken already! 

[romerun]

I have USD in hands but I want to buy LTC, would be nice if you guys support LTC before Gox.

[boonies4u]

Will kraken.com be phased out and replaced with payward.com?

[monsterer]

So, can you withdraw the bitcoins you earn with kraken? What about the fiat?

Looking at the site, this seems like a broker, not an exchange. Can you clarify your position?

[Dargo]

In light of more recent events, hurry the krak up!

We are on it, but want to make sure everything is done right before launch.

I have USD in hands but I want to buy LTC, would be nice if you guys support LTC before Gox.

We think it would be nice to support LTC too, but no definite ETA on that.

Will kraken.com be phased out and replaced with payward.com?

No. Payward is the company producing kraken.com

So, can you withdraw the bitcoins you earn with kraken? What about the fiat? Looking at the site, this seems like a broker, not an exchange. Can you clarify your position?

Kraken is both an exchange where you can exchange one currency for another and a Forex-like broker where you can trade currency pairs. You can withdraw any bitcoins/fiat you earn. But obviously a currency pair is a trading position only, not something you can withdraw. Any profit made from trading currency pairs can be withdrawn.

Edit: To clarify, the Forex-style trading is done on margin. Any margin trading is done as positions that are opened and only realize a profit or loss when closed - they don't produce an actual currency conversion.

I work for Payward, as vouched for by btcx here:

https://bitcointalk.org/index.php?topic=192104.0

[monsterer]

Kraken is both an exchange where you can exchange one currency for another and a Forex-like broker where you can trade currency pairs. You can withdraw any bitcoins/fiat you earn. But obviously a currency pair is a trading position only, not something you can withdraw. Any profit made from trading currency pairs can be withdrawn.

Edit: To clarify, the Forex-style trading is done on margin. Any margin trading is done as positions that are opened and only realize a profit or loss when closed - they don't produce an actual currency conversion.

I work for Payward, as vouched for by btcx here:

https://bitcointalk.org/index.php?topic=192104.0

So, are all your trades done as positions which must be closed? Or do you have two types of trade depending on the symbol?

Is BTC/USD a currency pair?

Cheers, Paul.

[Dargo]

Kraken is both an exchange where you can exchange one currency for another and a Forex-like broker where you can trade currency pairs. You can withdraw any bitcoins/fiat you earn. But obviously a currency pair is a trading position only, not something you can withdraw. Any profit made from trading currency pairs can be withdrawn.

Edit: To clarify, the Forex-style trading is done on margin. Any margin trading is done as positions that are opened and only realize a profit or loss when closed - they don't produce an actual currency conversion.

I work for Payward, as vouched for by btcx here:

https://bitcointalk.org/index.php?topic=192104.0

So, are all your trades done as positions which must be closed? Or do you have two types of trade depending on the symbol?

Is BTC/USD a currency pair?

Cheers, Paul.

There are two types of trades. For example, suppose you fund your account with USD. If BTC is trading for $100, you could buy 10 BTC for $1000. You have exchanged $1000 for 10 BTC and you can withdraw the 10 BTC to your private wallet if you like. Alternatively, you could open a $1000 long position in the BTC/USD pair on margin. This is an open trading position only and no profit/loss is realized until it is closed. There is no currency conversion and you don't own any BTC that you can withdraw. If the BTC/USD exchange rate climbs to $120 and you close the position at this rate, then you have a realized profit of $200 which you can then withdraw if you like.

The advantage of margin trading over currency exchange is that you can use leverage and also trade short. For example, if you use 5:1 leverage, you could open a $5,000 long position in BTC/USD with only $1000 margin (i.e. only $1000 of your account balance would be tied to this position and thus unavailable for other margin trades or currency exchanges). If you then close this position when the BTC/USD exchange rate climbs to $120, your profit is $1000. Alternatively, if you think the BTC/USD exchange rate is going to drop from $100, you could open a $5000 short position in BTC/USD using 5:1 leverage (and $1000 margin again) by opening the position as an order to sell. In this case you aren't really selling BTC, just opening a short position in BTC/USD. If the BTC/USD exchange rate drops to $80 and you close the position at that rate (with an order to buy), then you have a realized profit of $1000, which you can withdraw if you like, or use for other margin trades or currency exchanges.

Leverage allows you to open a position that is larger than your account balance. This can amplify your profits, but you have to be careful because it can also amplify your losses. Positions opened with margin should be considered trading positions only, not long-term investments. Long-term investments in Bitcoin should only be done by exchange.     

[monsterer]

Ok, thanks - how do you distinguish between the two types of trades on the site / api?

And, I presume because you're operating as both an exchange and a broker, the price-feed for the btc currency pairs actually comes directly from your own exchange and not MtGox?

[Dargo]

Ok, thanks - how do you distinguish between the two types of trades on the site / api?

And, I presume because you're operating as both an exchange and a broker, the price-feed for the btc currency pairs actually comes directly from your own exchange and not MtGox?

On the site, you use the same order forms for exchange or margin trading. The only difference is that for exchange, you select "None" for leverage and for margin trading you select a level of leverage (1:1, 2:1, 5:1, etc.). So if you select "None" you are creating an order to exchange in the selected currency pair and must have adequate funds in your account balance for the exchange. If you want to buy 10 BTC @ $100, you would select BTC/USD as the currency pair, "None" for leverage, and you would need at least $1000 in your account balance (actually you would need a little more to cover trading fees). If you select a level of leverage, you are creating an order to open a long (if the order is to buy) or short (if the order is to sell) position in the currency pair you have selected. If you create an order to buy 10 BTC @ $100 using 5:1 leverage, this is an order to open a $1000 long position in BTC/USD and only $200 from your account balance will be tied up in the position.

I haven't seen the API documentation yet, but I assume API will work similarly - i.e. no leverage for exchange orders and a level of leverage for margin orders.

The exchange rates for currency pairs, which governs prices both for both exchange and margin trading, will come from the market on Kraken and not from any other exchange. 

[monsterer]

Perfect, thanks for the answers

One last question - are your fees fixed at 0.5% for both transaction types?

[Dargo]

Perfect, thanks for the answers

One last question - are your fees fixed at 0.5% for both transaction types?

NP - The trading fees are the same for both transactions types. But for margin trades there will also be a margin maintenance fee because we are loaning you the funds for margin trades while the positions remain open. I believe at launch we won't charge a maintenance fee, but this will only be for a limited time. I'm not sure what the maintenance fee will be exactly, but I'll ask about this and get back to you.

Edit: To give a rough idea, the margin fee will work something like this. Suppose you open a $1000 long position in BTC/USD using margin. In doing so, you are borrowing the $1000 from us and we will charge an APR for this, but the fees will be assessed at least on a daily basis (possibly more frequently). The fees will be deducted from your account balance rather than being compounded into the loan. For example, suppose we charge 6% APR for borrowing USD and charge the fee for this on a daily basis. The daily fee for your $1000 position would then be $1000*.06/365 = $0.164. But this is only approximate since there may be other factors that change the amount. Also, the fee will be charged at a set time daily, so you will only be charged the daily fee for positions open at that time. If we charge the fee at 12 pm PST and you close your position at 11:59 am PST, you won't be charged the daily fee for this position. For a very short term trade, you might not be charged any margin fee. 

Also, the trading fees aren't fixed. As things are set on the site now, trading fees start at 0.5%, but go down with the amount of volume you trade over a 30 day rolling period (with a low floor of 0.25%). So fees decrease the more you trade, but they can go back up. If you didn't trade at all for 30 days, your fee would be back up to 0.5%. With the next update to the beta site, you will be able to view the fee schedule by clicking "Help" and looking under the "Fees and Pair Info" tab. This should be the fee schedule at launch, but I suppose it is remotely possible that it might change a little.    

[vokain]

need to trade now. please

[papaminer]

interesting...

the domain is registered in my area...

you guys own this?

http://www.yelp.com/biz/verge-gallery-and-studio-project-sacramento-2

[btcx]

interesting...

the domain is registered in my area...

you guys own this?

http://www.yelp.com/biz/verge-gallery-and-studio-project-sacramento-2

Yup. I'm the founder of that project, but I live in San Francisco now.  http://vergeart.com/about

[papaminer]

interesting...

the domain is registered in my area...

you guys own this?

http://www.yelp.com/biz/verge-gallery-and-studio-project-sacramento-2

Yup. I'm the founder of that project, but I live in San Francisco now.  http://vergeart.com/about

really nice...

good to know there's someone planning/creating something big in BTC near my area..

if you guys are looking for janitor.. let me know... ill be the cleaning man...

wanted to get paid in BTC...

[btcx]

interesting...

the domain is registered in my area...

you guys own this?

http://www.yelp.com/biz/verge-gallery-and-studio-project-sacramento-2

Yup. I'm the founder of that project, but I live in San Francisco now.  http://vergeart.com/about

really nice...

good to know there's someone planning/creating something big in BTC near my area..

if you guys are looking for janitor.. let me know... ill be the cleaning man...

wanted to get paid in BTC...

Haha will do.  Thanks for the offer

[superbit]

How are the margin traders going to be funded?  Is the site going to fund them and charge interest or will there be an opportunity for USD investors to lend their funds to traders similar to bitfinex?

Thanks,

[Dargo]

How are the margin traders going to be funded?  Is the site going to fund them and charge interest or will there be an opportunity for USD investors to lend their funds to traders similar to bitfinex?

Thanks,

We won't be offering a loan market for individual investors like Bitfinex does. Margin fees for a given currency pair at a give time will be the same for all traders. 

[superbit]

How are the margin traders going to be funded?  Is the site going to fund them and charge interest or will there be an opportunity for USD investors to lend their funds to traders similar to bitfinex?

Thanks,

We won't be offering a loan market for individual investors like Bitfinex does. Margin fees for a given currency pair at a give time will be the same for all traders. 

Any idea of what the rates will be for the traders?

[Dargo]

How are the margin traders going to be funded?  Is the site going to fund them and charge interest or will there be an opportunity for USD investors to lend their funds to traders similar to bitfinex?

Thanks,

We won't be offering a loan market for individual investors like Bitfinex does. Margin fees for a given currency pair at a give time will be the same for all traders. 

Any idea of what the rates will be for the traders?

The margin fees will be based on an APR as explained in post #31 above. But not sure what the rates will be at this point. We won't be charging a margin fee initially at launch.