On September 11, Kraken, one of the leading crypto exchanges, announced the official launch of “Kraken Perps”, a new perpetual futures trading product aimed at making complex, high-risk trading accessible to its vast retail user base. The launch marks a significant step for Kraken as it expands into the derivatives market, which saw a record monthly trading volume of over $515 billion in August.
Initially available to eligible clients in select regions, Kraken Perps allows users to trade perpetual futures contracts directly within Kraken’s app, using USD as collateral.
How Kraken Perps works: Simplicity meets strategy
Kraken Perps enables users to fund their positions using assets from their existing Kraken balance, with USD being the primary currency supported at launch. To initiate a trade, users can select an asset, then choose to either “Increase” to go long or “Decrease” to go short based on their price prediction. After that, they can decide on the size of their position. This streamlined process is central to Kraken’s goal of making a powerful trading tool easy to use.
Kraken offered a concrete example of how the product works: If a trader believes the Bitcoin price is undervalued, they can open a long perpetual contract instead of purchasing Bitcoin directly on the spot market. This allows traders to gain exposure to potential price appreciation without needing to lock in the full capital to own the asset.
Similarly, traders with a bearish outlook can open a short position, allowing them to potentially profit from a price decline. This strategy is often used for hedging existing spot holdings.
Built-in risk management tools
Risk management is a key component of Kraken Perps. According to Kraken, the platform includes essential safeguards to protect users, including customizable stop-loss orders. These orders automatically limit losses if the market moves against a trader’s position, helping to mitigate the risk typically associated with high-leverage products like perpetual futures.