- Commissions & Fees
Cryptocurrency is sweeping the market, and any good trader knows that your platform can make or break you. Cryptocurrency platform, Kraken, is one of those platforms that has many talking. With numerous features and more, could Kraken be the platform you’re looking for? Read our thorough review to find out.
Kraken is a cryptocurrency exchange and trading platform that enables customers to track, trade and manage digital currencies with more in-depth and sophisticated features not found on mainstream platforms. Launched in 2013, Kraken is one of the oldest and largest crypto exchanges. They hold full reserves of customer funds and boast transparency by providing cryptographically-verified audits through independent third-party auditors. It’s one of the few platforms that allow for up to 5X margin trading which enables short-selling permissions for select cryptocurrencies including bitcoin. This is a major edge for active crypto traders. Kraken caters to both institutional and retail traders. Global exchange access is available to U.S. (except New York), Canada, Japan and Europe.
Kraken Commissions and Fees
Kraken employs a volume-based Maker/Taker commission schedule applied to each trade. This can be a bit confusing to less seasoned crypto traders or retail stock traders used to paying a flat-rate (IE: $4.95-per trade) commission rate.
In a nutshell, if your 30-day trading volume is under $50,000 USD, then taker commission is 0.26% and maker commission is 0.16%. This means if you are placing market orders or limit orders to buy at or above the inside ask price, you’ll be paying a higher commission rate of 0.26% since you’re taking away liquidity. Whereas, if you are buying at or below the inside bid with a limit order, you are playing the role of a market maker by providing liquidity and receive a cheaper commission at 0.16%.
Commission rates drop as 30-Day dollar volume rises. If you trade $50,001 to $100,000, then the Maker/Taker rates drop to 0.14%/0.24%. Volumes of $100,001 to $250,000, then Maker/Taker rates drop to 0.12%/0.22%. Volumes of $250,001 to $500,000 drops Maker/Taker rates to 0.10%/0.20%. Volume of $500,001 to $1,000,000 drops Maker/Taker commissions to 0.08%/0.18%. Total monthly volumes of $1,000,001 to $2,500,000 drops Maker/Taker commissions to 0.06%/0.16%.
Since Kraken offers margin trading, traders need to be aware of the margin fees associated with it. Currently, margin is available for eight cryptocurrencies and two fiat currencies. Margin limits apply based on the verification level of the trader. Verification levels are based on meeting certain identity requirements including a KYC (Know Your Client) questionnaire to ensure against money laundering or criminal activities. Only the highest Pro verification limit enables the use of Kraken dark pool.
Account Fees and Margins
There are no account maintenance or software fees on either Coinbase or GDAX platforms. Bank fees apply for wire transfers. Neither platform provides margin or leverage. USD deposits are covered by FDIC insurance up to $250,000 per customer on GDAX.
Kraken Platform Features and Tools
Trading Window: Like other popular exchange platforms (IE: Coinbase Pro), Kraken has a similar charting combined with point-and-click order execution page that includes time and sales, market depth and visual depth indicators. I’ve always favored the visual market depth which shows the bidding size versus asking size shrink or expand dynamically. These tend to feel more intuitive as supply and demand visually compress and expand with the pace of trades.
Charts: Kraken has one of the better charting platforms in the cryptocurrency trading field. Time frames range from 1-minute to 1-day, 3-day and weekly for wider time frames. It also has a full set of popular trading indicators including moving averages, stochastic to PSAR. The drawing tools enable users to create their own trend lines, rays and even Fibonacci retracements quickly and effectively.
Watch Lists: Kraken allows users to monitor and track over 2,000 cryptos across multiple exchanges on both desktop and mobile. Users can quickly create watch lists of any combination of cryptos.
Mobile Trading: Kraken provides a sharp mobile trading app that comes complete with charting tools and execution that’s fully sync’d to your desktop and portfolio immediately.
Research Tools: Along with technical research, Kraken also provides news and articles scraped from various sites as well as a blog called the Weekly Hash.
Crypto Futures and Hedging: One of the coolest features of Kraken is the availability of crypto currency futures contracts, which come with 50X leverage. The commissions are 0.075%/-0.02% Maker/Taker structure. While liquidity can be thinner with wider spreads if trading them directionally, they are often best used for providing a hedge on your crypto portfolio (IE: Shorting Bitcoin futures against your Bitcoin long position during super volatile periods). Currently, only the most widely used five cryptos are available for futures trading which include Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ripple. Kraken Futures is licensed by the Financial Conduct Authority (FCA) of the U.K.
Executions and Routes
Order Entry: Traders can place their trades on the chart or through the order entry window. It’s important to pay attention to the leverage meter which users can select to use up to 5X margin on selected cryptos. Users can place various order types form limit, stop or market orders on both buys and sells. Short-selling applicable cryptos involves clicking the sell orders and covering with buy orders.
A dark pool is an invisible order book displaying no bid/asks, for the purposes of anonymity and minimal market impact. Dark pools are usually meant to match up larger block orders. Kraken has their own dark pool that encourages higher volume trades using the Maker/Taker system based on USD-based 30-day volume plus 10-basis points (0.1%). From $0-to-$50,000 average daily trading volume, the commission is 0.36% for both Maker and Taker. This means a commission rebate applies if providing liquidity as a maker, instead of just a discounted rate when using the normal exchange route.
Type of Trader Kraken is Best For
Kraken is best suited for experienced crypto traders who have a trading methodology and the discipline to manage margin leverage responsibility (IE: Not blow out accounts). The tools are excellent and will help a good trader optimize their skill sets. Unfortunately, the extra leverage can also enable poor traders to blow out quicker. Although there are no PDT rules, there’s always the chance of further government and SEC regulation with cryptocurrency trading. It’s best to stay on top of the news.
- Short-selling available utilizing up to 5X margin
- Stable platform with solid exchange security
- 24 hours a day and seven-days a week access and customer support
- Advanced order types with liquidity commission rebates
- Wide selection of over 2,000 cryptocurrency pair combinations
- Crypto futures enables up to 50X margin and hedging strategies
- The multitude of fees can be overwhelming to keep track of
- Cryptocurrency regulation is a wildcard that could face mounting restrictions by region