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Initial margin

The collateral the exchange requires to open one futures contract and hold it overnight.

Margin and leverageA small deposit controlling a much larger position, and the point at which losses trigger a margin call.Position you controlnotional value $100,000your margin deposit: $5,000$100,000 / $5,000 = 20:1 leverageYour deposit absorbs every dollar of loss$5,000$2,500$0Equity leftMARGIN CALLequity has fallen to $2,5000%1%2%2.5%3%4%5%How far the price moves against you
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.

Initial margin is set by the exchange based on volatility and changes over time. It is a performance bond, not a loan: you do not pay interest on it. Brokers may require more than the exchange minimum, and much less for intraday positions (day-trading-margin).

Once open, a position must stay above the maintenance-margin or face a margin-call.

Example: es initial margin might be about $15,000 per contract, on a notional-value of $250,000, roughly 6% of the exposure.

Related: maintenance-margin, day-trading-margin, margin, notional-value

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