GLOSSARY · CONTRACTS & MONEY
What is Margin?
Margin is the good-faith deposit your broker requires to hold a futures position.
Futures margin isn't a loan — it's collateral. Initial margin is required to open a position; maintenance margin is the minimum you must keep. Brokers also set lower day-trading margins for positions closed before the session ends.
Low margin is what creates leverage. It does not reduce risk: losses are based on the full contract value, not the margin you posted.
EXAMPLE
A broker might allow ES day trading for $500–$1,000 margin while one contract controls roughly $250,000 of the S&P 500. A 1% market move is about $2,500 — several times the margin.
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