TL;DR- Yes, you can set stop losses and take profits on Kraken! Go the the trade screen and select the advanced trading option. Under order type select stop loss or take profit. Enter the price event price you want the crypto to sell at.
Despite continued adoption, cryptocurrency continues to be a beyond-volatile asset class. With a market cap of ‘only’ $2 trillion, crypto is a smaller boat in the sea that gets tossed around when the going gets rough. By comparison, the US stock market has a cap of $80 trillion, and the housing markets of developed countries have several times that.
This means it can be beneficial to set stop losses and take-profits. As the saying goes- no one ever went broke taking profits. I’ll discuss the advantages and drawbacks to setting stop losses and take-profits.
Kraken is the fourth largest crypto exchange in the world, after Binance, Coinbase, and KuCoin. Kraken has the added benefit of being US-based (SF Bay Area) and regulated. To me, this means if there are any mishaps, customers will be protected. Kraken often makes headlines for cooperating with and actively working with regulators. Should the cryptopocalypse come, exchanges that play by the rules will fair better.
What does Kraken do well? For starters, it has a large selection: Kraken offers over 90 different cryptocurrencies to its consumers, second only to Coinbase for US exchanges. It also boasts 130 crypto trading pairs. Kraken’s fees are low (for a crypto exchange). While Kraken’s entry-level charges are middle-of-the-road, Kraken Pro’s service fees are among the lowest in industry.
Where is Kraken found wanting? There are only a couple of options to fund your Kraken account. To connect people’s bank accounts, the site uses a third-party service called Trustly, which Kraken claims works with over 1,000 financial institutions. If your bank isn’t one of those, you’ll have to wire money into your account, which may require you to call your bank to set up the transaction. Wire transfer also come with fees in the $20-$30 range. Yikerz Island.
What are stop losses and take profits?
A stop loss prevents you from losing too much on a trade if the market goes south. I’ve found stop losses to be particularly useful in the cryptocurrency market, given its enormous volatility. Cryptocurrency investing is already insane enough- any measures that you can take to offset losses and lock in gains are valuable.
Stop loss example
You buy 1 Ethereum at $4500 and set a stop loss for $4300. The price of Ethereum drops to $3800 the next day. Instead of losing $700, you only lost $200 because you set a stop loss at $4300- that is, Kraken sold your Ethereum at $4300 and gave you $4300 of USDT. Kraken will be cashing you out in USD or whatever your set fiat currency is on the Kraken platform.
Drawbacks to stop losses and take profits
For the above example, let’s say Ethereum on briefly went south of $4,300 before rocketing up to $6,000 in a matter of hours while you were at work. You’d be stuck with your $4,300 while other hodlers would be sitting on the $6,000 Ethereum. Don’t think this is crazy- it happens all the time. Timing the market is next to impossible.
Likewise, let’s say Bitcoin blew past $65,000 and went to $100,000. You’d be stuck with your $65,000 while other hodlers would be sitting on $100k bitcoin. For them, it’d be Lambo time but you’d be stuck in an F-150. (I love F-150s, no hate here).
Since the golden rule of investing is to never lose money, I personally feel that stop losses are more powerful than take-profits are.
How to set a stop loss on your Kraken trade
Note that I’ll be doing the walkthrough for Kraken, but the button clicks and process on Kraken Pro are similar!
1. You first have to actually buy the crypto before you can set the stop loss, since the stop loss is technically a sell action. Lots are confused by this- but keep reading and it’ll make sense. On the Kraken home screen, click trade on the top left menu.
On the trade toggle menu, click over to advanced.
Toggle to the sell button and select the trading pair from the drop down menu to the right of that. If your stop loss price is reached, this is the currency you’ll be cashed out with. You can see below I’ve selected ADA/USD for my trading pair.
2. Now it’s time to set your stop loss. What price do you want to liquidate at? Typically what you do here is pick a price that if the crypto breaks through, it will continue to fall much lower. Hacks on YouTube call these ‘support levels’. Here, I’m setting a stop loss for my ADA, which is currently trading at $1.10. I think if the price breaks below $1.00, it will fall much further. So I’m going to set the stop loss at $1.02 to make sure it sells before that volatile break point of $1.00. Enter the volume of the crypto you want to sell if it sinks below the stop loss price and select stop loss from the order type menu.
On the right, you’ll see the options for starts and expires if you want to get fancy. I don’t bother with these and leave them on their default values of ‘now’ and ‘good until cancelled’.
Now it’s time to enter that all important stop loss price. I put $1.02 into the box for my Cardano, and used the ‘=’ sign meaning that when ADA strikes this price the crypto will sell for USD. The ‘-‘ sign means difference from the market price. I don’t mess with that. This is complicated enough for me- I just set ‘=’ and the sell price and that’s it. Now hit ‘sell ADA for USD’ or whatever currencies are on your red button on the bottom right.
Depending on your level of security with Kraken, you may have to enter your 2FA code or do an email confirmation.
How to a take profit on your Kraken trade
1. This step will happen when you buy your crypto. Head over to the trade screen by selecting the trade button on the top menu. On the trading screen, flip over the the advanced tab for trading.
2. Enter the volume of crypto you’d like to buy and set the take profit if and when that price event happens. Under the order type drop down menu, select take profit. Make sure the profit price toggle is set to the ‘=’ sign and enter the price you’d like to sell at once that price event occurs.
Select the ‘buy XYZ with USD’ [whichever crypto you’re buying] green button on the bottom right. Confirm your trade.