Kraken exchange review – what is it and how does it work? Learn why is it unique

Do you want to know which is the best solution, if you want to short cryptocurrencies? Watch our latest video of Kraken exchange review, to find out about one of the only cryptocurrency exchanges available for U.S. citizens.

Kraken exchange review – a guide for cryptocurrency market.

Hello, and welcome to Diary of a Trader. Today, we’re going to be going over, in this video, the exchange for cryptocurrencies Kraken, which is unique in that it is one of the only cryptocurrency exchanges available for U.S. citizens, that allows you to short cryptos. For the normal person, unless you have an LLC, or you are an accredited investor, it’s difficult to open up an account on an exchange like a Bitfinex. So, Kraken is probably the best solution, if you want to short cryptocurrencies and actually, shorting is a very good idea. It is a very normal thing in every market. It is the other half of trading and it should not be discouraged, it should be encouraged. But leverage is risky, so you know, before you do anything, make sure that you know what your risk tolerance is and past performance is not indicative of future results and all of that jazz.

So, let’s go ahead and get into it, we’ve got the front page here. You know, we’re not going to go through the entire account creation process because we’ve gone through that with the Coinbase and the Binance videos and the process is very much the same. It still includes uploading photos, it’s the KYC, Know Your Customer rules and regulations that you need to follow, but once you’ve done that, then we can just go to Login. And I’m actually going to point out that there are a couple of parts, there’s like two sites that you would use for Kraken. There’s the main page, which we’re going to investigate right now, and then we have to put in our two-factor authentication, and that’ll bring us to the main site and that is right here. So, it tells us what our positions are, what are the prior trades that we’ve done, in and out deposits and such, trade balances and all of that here. And it will do it in any currency that you want. So, it defaults to the Euro, but, of course, I’m in the States, so I’d like to look at it by there. Otherwise, we can look at these values depending on others, as well. So, we have the trade area here, we can put in new orders, like so. And then, there’s a couple of other options, so we have the Simple Ordering and then we have Intermediate and we have the Advanced.

Now, this is, on the right side of that, this is the trade.kraken.com, this is actually their newer interface for the trading part of it, where they actually have some indicators and the order flow like you’re familiar with some other exchanges, but we’ll come to this here in a little bit. But this used to be the only way you could do it, and you can see here that there’s leverage available, okay? So, you see leverage for XBT, is Bitcoin. So Bitcoin-Dollar, you can get up to five times leverage, if you want to buy or sell to short… To short, you sell and you can do that with Ethereum, they have five times leverage. But those are the only two. They don’t have five x leverage on everything. They only have five x leverage on Ethereum and Bitcoin and that is about it there, unless they have done it for Ethereum Classic, two times leverage on Ethereum classic. Some pairs have two x leverage, but the only ones that have five x leverage is Bitcoin and Ethereum. And then, you would put in how much you want to buy, when you want it to start, you want to do it right away, like a marker order, and this is actually more of a confusing process than you would do it on the order form itself. We’re going to get to how to do the order process, their new trade site in a moment. The funding will just, if you want to transfer over cryptocurrency from one exchange to the other, that’s where you do it here. It just looks a little different than what we’ve seen on Bittrex, Binance and Coinbase, and so, if we wanted to, let’s say we’ll look at Litecoin, and if I wanted to transfer Litecoin, I’m going to get prompted to acknowledge that if I send it to the wrong address it’s not Kraken’s fault. And I select here. Now, what makes Kraken a little different… Well, another thing that makes him a little different is that the deposit addresses, they expire, alright? So, on Binance and Bittrex, when you have deposit addresses for Bitcoin, or Ethereum, or Litecoin, or Dash, all of those stay the same, they don’t change. Kraken is a little different, and if you’re used to using the same address over and over, you really want to double check, because, after a certain period of days, these will expire, so you’ll have to generate a new address and once that’s done, I can say Select, right-click on it, go to copy and then I have my Litecoin address and if I wanted to deposit Litecoin over here, to trade with, then I could just send it over here like we do on any other way that we’ve seen on the other videos. Send, you can look at EOS, Gnosis, Monero. These are the coins that they allow you to deposit to Kraken.

And, I’ll say that Kraken has a little longer time period for the coins to show up than other exchanges. I’m unfamiliar with why that is. If that’s part of their internal issue, or if that is just the nature of the beast, I’m unsure. The withdrawal process is the same. If we click on Withdrawal and then we will get the same here, that we can take a peek at and see how many we’ve withdrawn in the past. If you look at the Euros and the Dollars, in order to transfer in Dollars, you’ll have to go through the KYC process, where they… You have to get to that level three KYC process, and then you can add your bank account in here and directly deposit dollars, which is a very efficient and a very fast way to do this. Is very similar to Kraken. This is one of the few U.S. Exchanges that actually lets you deposit US dollars into the exchange. A lot of other exchanges, you can’t do that. So, we have this right here, and then the audit is, I don’t want to click on that, because that shares personal information. Security, two-factor authentication, master key, trading if you wanted to do two-factor authentication for trading, that’s kind of a pain in the butt, because every time you take things on or off, you, as far as a trade, if you want to buy or sell, then you’re going to have to put in your two-factor authentication. But, for two-factors withdrawals, I’m surprised that I did not… I’ll do that later. But, you definitely have two-factor authentications done for deposits and withdrawals. That way, in case somebody were to somehow access your Kraken account, even with the two-factor authentication, to do the withdrawal, they would need to do that again. On Settings, this is just the information, basic about your account name, public account ID, your email and all that jazz. The History is just going to give you your detailed list of some of your withdrawals, when you logged in, rollovers, like fees that are paid for holding margin trades. Get Verified, this is a KYC process so, you know, it says right here, These are the requirements, so you know Tier 1 – Full name, Date of Birth, Country Residence, Phone Number. Address Verification is for Tier 2 and then Tier 3 is where you get to have a lot of these higher limits, you know, $25,000 deposits, $25,000 withdrawal, these are for daily withdrawals and deposit, monthly limits and $200,000 for monthly and $200,000 worth of crypto withdrawal monthly. And, for here, this is really just a lot of the same things that we would need to do that fulfill all the KYC requirements, the ID, front and back of your driver’s license, or your passport. And then, for Tier 4, we have these higher levels and, in fact, I know for a fact that you are not limited to the $500,000 at Tier 4, that is just what they put here. If you’re an accredited investor or if you have your own LLC and it’s well capitalized, you just have to show some proof. They’ll send you an email with things that they’ll want to know about you, and if you are an accredited investor you know what your income limits are to fulfill those SEC standards, and yeah, it’s a fairly simple process to go through all of this, okay?

Mt. Gox claim this is no longer in use, here on Kraken and it’s really not worth spending a lot of time going over. So, again, the main page of Kraken is right here. Well, if you click on Account, then that’s just going to bring you over to the same tabs that we had right here. And the trading on Kraken used to be done here, but now they came out earlier in this year of 2018, they came out with this site where they have their own, mostly proprietary, charting software, they deviate a little bit from their peers in that they are using their own setup and not using TradingView. And we can see that the pairs that they offer, we see Dogecoin, we see MLN, you know, they’ve got some pairs that are old, that do not have a lot of volume or participation, but they have added some others like EOS, Ethereum Classic, XRP. And so, if we click on the BTC/USD pair, we can see that it looks much like any other chart. The indicators that they have here, you can change the type of chart you want to look at, if it’s a Line chart, a Bar chart or the Heikin-Ashi charts. You can adjust the charts to be a percentage or logarithmic. The overlays that they have here are very limited. The Williams Alligator, this is an interesting moving average crossover system where the three moving averages are identified as the lips, the mouth, and the jaw… Lips, teeth, and jaw, so it’s like a mouth is opening, that’s the Williams Alligator system. Ichimoku system’s on here, it’s probably all you’d really need, in my opinion. I love the Ichimoku system. They have other indicators for down below the various oscillators here, like the RSI, the Stochastic RSI, the On Balance Volume indicator, which is a very nice one. I mean, the indicators that they do have here, they do not have a large selection, but you really don’t need more than what they have here, I mean the CHOP Index is here, this is an interesting indicator. In fact, this indicator was created a little oddly. It’s not really based on a lot of math, it’s based off of the bereavement cycle. The gentleman who created this indicator asked a number of pastors and priests and he said, “Well, how long does it usually take for a person to recover from the death of a loved one?” And they said, “Nine to 11 months”, so, all he did is he thought, “Well if there’s a significant drop in the market, how long does it take for a person to get over that loss of money?” And that is kind of the calculation that… You know what, that’s the _ curve, not the Choppiness Index, but you just learned something different.

So, we can see here, here’s the visual representation of the book, the number of values itself, we have the bids and the offers, bids and asks, and we see here we have the trades that were executed and then, over here if we wanted to execute a trade, we can do it by Market, Limit, Settle Position, Stop Loss or Take Profit. And again, to short, because this is the bitcoin-dollar pair, if you want to short, all we would do is hit Sell and we would do five times our leverage, and then that would execute the order and the orders populate on the screen.

The Kraken Exchange is very well done. Aesthetically, it could do a lot better. I will mention one thing, though, if you have this screen up, this automatically logs out after a couple of minutes of not using it. You will have to re-log in frequently on this Web site if you’re trying to use it along with the trade screen here, so just be aware of that. This is very annoying if you are trying to keep track of things on two different screens, this screen will log you out very fast and right, we have a pretty nice idea of what this is capable of. Now, personally, if you might be asking me, “Well, why do I need to have money on different exchanges or why would I want to have money on different exchanges?” One of the reasons that, you know, like I have Ethereum that I have parked ready to send over to Kraken in case it’s going to short. The reason I don’t have a lot of holdings on Kraken, is because last year, they had an update and it was down for quite a while, and there was a lot of paper loss involved, and I wanted to use a lot of that liquidity on another exchange because I wanted to buy, so I have my Ethereum sitting on a wallet and when I want to go short, I can just send it back over here and hopefully it’s active. The issue that Kraken has faced is, they’ve lost a lot of customers, especially in the latter part of 2017 because they could not keep up with the influx of new customers. They had some technical issues. They just had a really, really dark stain on their reputation. But, they have been very, very proactive about addressing that and fixing that, and since then, they have done a lot better. We’re going to go over some of those here near the end of the video. But, to answer the question of why would I want to use this exchange? It’s because you can short cryptocurrencies on it. So if you’re a person who likes to hedge their longs with shorts, this is a great opportunity to do that. If you want to trade in the bear market and not just take pullback trades, because this is a frustrating market that we’ve been in ever since 2017. It’s hard to want to trade in a market that is mostly to the downside and if you’re not able to short in a bear market, you’re really limited to trying to guess where a bottom is going to be and enter that. But shorting is very effective, it’s profitable. It’s part of a market. It provides honesty and integrity to prices. It is essential. It should not be demonized, it’s really one of those things where it’s not good or bad and neither is bullishness good or bad. It’s just part of how a market is treated.

And so, let’s look at some of the things that Kraken has done to really address their customers. You know, they haven’t faded away. They haven’t tried to just kind of distance themselves, they haven’t slowed down, they’ve actually worked very, very hard. And I would like to give Kraken some credit, where credit is due, because there are a lot of exchanges and there’s a lot of other things in this industry, this entire cryptocurrency sphere where there’s a lot of people who and organizations that try to take advantage of people because they’re able to or because they just don’t want to put up with the headache. I don’t know what it is but in any new emerging market an asset class you’re always going to have bad actors, but Kraken has really tried to do a good job by doing well to their customers. Over the last quarter, and this is in July of 2018, they’ve been pretty good about reporting some statistics, so their satisfaction of client satisfaction ratings, according to Zendesk, for the exchange industry is Kraken’s at 94% versus 93% replies to resolutions. They’ve got a number of replies from a support specialist to a client 1.35 versus the BenchMark of nine. Total resolution time, takes about two hours less than the BenchMark’s. The first reply time is about an hour less than the first Benchmark. Ticket volume, they have had a lot of tickets and I think if Kraken were to really touch up that main page or just get rid of it, they would have a lot less issues, because, you know, trying to figure out your leverage amount or limit or how much you’re able to do is not very apparent on Kraken. They don’t have a very good interface. So, 133,671 tickets versus the BenchMark, of 421. One touch resolution, the percentage of support tickets solved with one response, 68% versus 37%. Those are actually pretty good numbers. The KPIs, Key Performance Indicators and Accomplishments, you know, you can see here that they’ve really, really done a phenomenal job of addressing a lot of the issues related to their platform, in the market, in general, and really, if you look at the decrease in the volume of some things, that is really indicative of the decreasing volume of the retail participation in the market because it has been in a bear market all of 2017, and we can see that the satisfaction percent was in the third quarter of 2017, so prior to the monster bull run, it was 89.19% and then, in quarter four, in the first quarter, quarter four was when we saw that massive rise to near 20,000 in Bitcoin, Kraken had a lot of technical issues, they weren’t able to keep up with the volume. You know, in their defense not many exchanges, even Coinbase had difficulty keeping up with the demand. So, they had a lot of bad feedback there, that extended into the first part of 2018 and when things kind of slowed down, as they normally do during these peaks, they’ve spent this time during this low volatility, it hasn’t been low volatility, but the low volume participation they’ve really spent this time to develop a better and a safer and secure and efficient service. And I am actually very impressed, personally, with how smooth it has bee, ever since last January.

The client satisfaction has improved significantly, 94% compared to 80%, the prior quarters. These are all the things that we went over median first response time is strong improvement, to 2 hours this quarter, compared to over 7 days in quarter 1. This was an issue, I remember putting in tickets myself, and the fourth and first quarters of the last calendar quarter of 2017 and the first calendar quarter of 2018, it was impossible to get a response. There was actually, I remember I wasn’t the only one complaining about it. There was a lot of people all over the place complaining about those long wait times. Median total resolution time has improved, the Tier 4 applications are processed and approved in less than six hours, which is actually phenomenal because those kinds of applications really require a lot of, you know, a person reviewing it and doing the due diligence on Kraken side, to make sure that they fulfill these requirements to have those kinds of limits. So there’s something great about that, the Tier 3 verifications too kind of require a personal touch, because they need to verify the IDs and the pictures and only two complaints filed with the Consumer Financial Protection Bureau, down from 17 in quarter one. I’m actually surprised by that, that there were only 17 in quarter one of 2018, that is very different. The highest daily number of tickets was 18,388 in January 2018, highest daily number of new accounts was 71,000, alright? 71,000 new accounts on January 3rd, 2018. Top 5 ticket categories: Verification, General Questions, Fiat Funding, Account Access, and Crypto Funding. Crypto Funding and Fiat Funding, the margin would definitely fall under those issues and nearly 700,000 accounts have been verified on their exchange over this period.

So, Kraken has made a pretty good effort in there, in the entire crypto sphere. It’s very evident by the creation of this new trading platform that they have, this new charting and trading look is very welcome, probably due with a little more aesthetic look, maybe do what their competitors do, and just tap into TradingView’s service, but otherwise, this is probably the best option. I think it’s the best option, I mean, personally, I enjoy Kraken a lot. It’s the easiest way for a U.S. citizen to access the ability to short on margin in cryptocurrencies. It’s one of the only ways to do it, and even if it wasn’t it is actually one of the safest and one of the more efficient ways to do it. They don’t have the predatory leverage like you see in a lot of other exchanges outside of the U.S. The leverage is limited. But that’s, you know this is a retail-based exchange and they got to know their customers and retail traders are very, very prone to getting into the gambler’s mindset and over leveraging already, so limited to five times, I think that speaks to their integrity and their willingness to limit the leverage and to make sure that they’re doing right by their customers. So, yeah I mean it’s a pretty nice exchange and it’s an easy way to short, and yeah. I hope you guys enjoyed this video and I look forward to speaking with you in our feature videos. Have a great day! Bye-bye.