What is Futures Margin? - What Is It? How Does It Work?

What is Futures Margin? - What Is It? How Does It Work?
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Margin is a critical concept for those trading futures and derivatives in all asset classes. Futures margin is a good-faith deposit or an amount of capital one needs to post or deposit to control a futures contract. The margin is a down payment on the full contract value of a futures contract.
Futures exchanges determine and set futures margin rates. At times, brokerage companies will add an extra premium to the minimum exchange margin rate to lower risk exposure. The margin is set based on the risk of market volatility. When market volatility moves higher in a futures market margin rates rise. When trading stocks, there is a simpler margin arrangement than in the futures market. The equity market allows participants to trade on up to 50% margin. Therefore, one can buy or sell up to $100,000 worth of stock for $50,000.
Margin Rate for Future Contracts
In the world of futures contracts, the margin rate is much lower. In a typical futures contract, the margin rate varies between 5 and 15% of the total contract value.
Initial Futures Margin is the amount of money that is required to open a buy or sell position on a futures contract.
Initial margin is original margin, the amount posted when the original trade takes place.
Margin Maintenance or Variation Margin
Margin Maintenance is the amount of money necessary when a loss on a futures position requires one to allocate more funds to return the margin to the initial or original margin level. Closing or liquidating a position eliminates the margin call requirement.

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[@keysersoze3159]

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[@tiokoka]

Well explained with practical examples!

[@marinabaskakova2333]

Thank you, hope one day I can attend your course life in London.

[@DrBluefox]

go to LSE instead kings isnt as good

[@liamvanas5934]

Amazing videos!

[@tradingscape8910]

thank you again

[@TEScompetitive]

Legend

[@TEScompetitive]

So margin is determined per lot/contract bought or sold? For example ES is 5K margin if I was long 1 lot, and if I wanted to buy another 1 lot, I'd need 10K?

[@PBoyle]

Yes, exactly

[@TEScompetitive]

@@PBoyle Thank you

[@qeoo6578]

What happens when someone doesn't respond to the margin call? The broker closes their position & can sue them for the loss?

[@PBoyle]

Yep.

[@poohshmoo9892]

What is the best way to keep me awake whole night .. margin call i got after close !! because broker decided to increase the margin requirements on my portfolio from 45% to 75% or even 100%

[@ghgrhgrr7378]

Could I just buy more contracts and lower my entry price instead of putting that money toward maintenance margin?

[@kurtislawrence233]

Derivatives