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Futures margin is a performance deposit against a larger exposure

Initial and maintenance requirements serve different functions.

DailyForex explains futures margin as a good-faith performance deposit, not the full purchase price of a contract. Because the deposited amount is only part of the contract’s notional exposure, a relatively small underlying move can produce a much larger percentage change in the funds committed to the position.

The article separates the initial amount needed to establish a trade from the maintenance level needed to keep it open. Daily valuation of positions can change the account balance and create a need for additional funding. Exchanges and intermediaries can impose requirements that change as market conditions change.

This distinction helps explain why the minimum deposit is not a dependable estimate of the most that can be lost. The summary does not quote a universal margin percentage: the relevant contract, intermediary rules and current requirements must be identified for any specific calculation.

Image source: DailyForex

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