What is Initial Margin?

Initial margin is the deposit required to open a futures position. It is a good faith deposit that the contract will be honored, not a down payment, and it is usually a small fraction of the contract's full value. The exchange sets a minimum and a broker may ask for more.

Why Initial Margin matters

Because the deposit is small next to the position, losses can use it up quickly, and they can go beyond it.

Related terms

Lessons that use this term

Continue