I still do not get how margin allowance is calculated. Currently, I have the following:
Trade Balance: 21
Equity: 20
Used Margin: 10
Free Margin: 10
Margin Level: 203%
Still, I cannot open new positions because "margin allowance exceeded". Shouldn't I be able to open positions until a margin level of at least 150%?
"Margin allowance" refers to your borrow limit, not your margin level. The borrow limits are shown here:
https://support.kraken.com/hc/en-us/articles/209238787-What-are-the-margin-borrow-limits-Let me know if you don't seem to be able to borrow as much as you should.
The system won't let you open positions that would take your margin level to near or below 100%, but in that case the message should say that you have "insufficient funds" - i.e. you need to add funds to your account in order to open more positions.