Futures Margin Requirements Explained: Initial vs Maintenance
Futures margin requirements decide how much cash you actually need to control a contract, so if you do not understand futures margin requirements, you have no idea how much risk you are really taking.
What Margin Is (and What It Is Not)
In futures, margin is not a down payment like in stocks. It is a performance bond. The exchange and your broker hold it as proof you can cover daily gains and losses on your futures contract.
You still get full profit and loss on the whole contract value. Margin just sets the minimum capital you must park in the account to play.
The Three Main Types of Futures Margin Requirements
You will mostly deal with three flavors of margin. Call them what they are and do not mix them up.
| Margin Type | Who Sets It | What It Controls |
|---|---|---|
| Exchange Initial Margin | Futures exchange (CME, etc.) | Minimum to open and hold a position overnight |
| Exchange Maintenance Margin | Futures exchange | Minimum balance you must keep to avoid a margin call |
| Broker Margin (Day or “House”) | Your broker/prop firm | Extra rules on top of exchange margin, usually for day trading |
Initial Margin: The Cost to Get in the Door
Initial margin is the futures margin requirement you must meet to open a position and carry it overnight. If initial margin on a contract is $5,000, you need at least $5,000 in available funds for each contract you want to hold.
Key points about initial margin
- Set by the exchange, not your broker.
- Based on historical volatility and risk of that contract.
- Can change when markets get wild; the exchange just raises the number.
- Scales by contract count. Two contracts means 2 × the initial margin.
If your account falls below initial margin after you are already in the trade, you are not instantly forced out. That is where maintenance margin comes in.
Maintenance Margin: The Line You Cannot Cross
Maintenance margin is the minimum equity you must keep in your account per contract to hold that position. It is always lower than initial margin, but crossing it is what triggers a margin call.
Example of initial vs maintenance futures margin requirements
Say a contract has:
- Initial margin: $5,000
- Maintenance margin: $4,500
You open one contract with $5,000. If open losses drop your equity on that position below $4,500, you are under maintenance. Now you are on the broker’s radar.
What Actually Happens on a Margin Call
A margin call is your broker telling you your account is below the maintenance futures margin requirement and you need to fix it fast.
Typical margin call process
- Your position loses money and your account equity falls below maintenance.
- The broker issues a margin call for the amount needed to push you back above initial margin.
- You either wire in more cash, reduce your position size, or get flattened by the broker.
If you ignore a margin call, the broker will close positions to cut risk. They do not care about your trade idea. They care about not getting stuck with your losses.
How Day-Trading Margin Fits In
You already have an article on day margin vs. overnight margin. The short version: brokers often let you trade with much lower futures margin requirements intraday, but they expect you flat or funded up to exchange margin before the close.
That cheap day-trading margin is bait. It makes over-leveraging easy. Treat it like a privilege, not free money.
Risk Management: Position Size vs Margin Requirement
Margin is the minimum, not the recommended amount. If you size trades off margin numbers alone, you are begging to blow the account.
Basic rules that keep you out of trouble
- Risk a fixed dollar amount per trade, not “one contract because I can.”
- Hold extra cash above margin so a normal loss does not trigger a margin call.
- Know the dollar value of a one-tick move for your contract using your ticks and dollar value numbers.
- Cut size when volatility spikes and margin jumps.
Futures Margin Requirements: The Bottom Line
Futures margin requirements tell you the minimum capital needed to open and hold a contract, but a serious trader treats those numbers as the floor, not the target. Understand initial vs maintenance margin, stay clear of margin calls, and size positions based on risk, not on how much your broker lets you borrow.