TL;DRThe deposit required to open and hold a futures position. Think of it as a performance bond, not a down payment or a loan.
In futures trading, margin is the amount of money you must deposit with your broker to open and maintain a position. Unlike stocks, where margin means borrowing money, futures margin is a good-faith deposit. It's a performance bond guaranteeing you can cover potential losses.
There are two types you need to understand: initial margin and maintenance margin. They serve different purposes, and knowing the difference will keep you out of trouble.
Initial margin is the amount required to open a new position. This is set by the exchange (CME Group for most US futures) and your broker may require more on top of that.
Maintenance margin is the minimum account balance you must maintain while holding an open position. It's always lower than the initial margin. If your account balance falls below the maintenance margin due to losses, you'll receive a margin call.
For example, the E-mini S&P 500 (ES) might require roughly $12,000 in initial margin and $11,000 in maintenance margin per contract. These numbers change regularly based on volatility.
A margin call happens when your account equity drops below the maintenance margin requirement. When this happens, your broker will demand you deposit additional funds immediately, usually by the next business day.
If you don't meet the margin call, your broker can and will liquidate your positions without your permission to bring the account back into compliance. This can happen at the worst possible price.
This is why experienced traders never use more than a fraction of their available margin. Just because you can open 10 contracts doesn't mean you should.
Many brokers offer reduced day trade or intraday margin, sometimes as low as $500 per ES contract compared to $12,000+ for overnight positions. This lets you control larger positions during the session.
The catch: you must close all positions before the session ends. If you're still holding at the cutoff, your broker will either auto-liquidate or require you to have full overnight margin in your account.
Day trade margins vary wildly between brokers. They're a competitive feature, not an exchange requirement. Lower margin means higher leverage, which means faster gains and faster blowups.
One ES contract controls roughly $250,000 in notional value (the S&P 500 index times $50 per point). If you're posting $12,000 in margin, you're controlling about 20x your deposit. That's significant leverage.
A 1% move in the S&P 500 equals roughly $2,500 per contract. On a $12,000 margin deposit, that's a 20% gain or loss on your capital from a 1% market move.
This is why position sizing and risk management are non-negotiable in futures. The leverage is built into the product.
| product | initial | maintenance | day trade* |
|---|---|---|---|
| E-mini S&P 500 (ES) | ~$12,650 | ~$11,500 | $500-$2,000 |
| E-mini Nasdaq-100 (NQ) | ~$17,600 | ~$16,000 | $500-$2,000 |
| Crude Oil (CL) | ~$7,000 | ~$6,400 | $500-$1,500 |
| Gold (GC) | ~$10,000 | ~$9,100 | $500-$1,500 |
| Micro E-mini S&P (MES) | ~$1,265 | ~$1,150 | $50-$200 |
| Corn (ZC) | ~$1,650 | ~$1,500 | $250-$500 |
*Day trade margins vary by broker and change with volatility.
ES margin example
You have $25,000 in your account. ES initial margin is $12,650 and maintenance is $11,500.
You can open 1 contract with $12,350 in excess margin. If ES drops 50 points ($2,500 loss), your equity is $22,500, still above maintenance. Never max out your margin.
Margin call scenario
You hold 2 NQ contracts overnight. NQ initial margin is $17,600 each. Your account has $38,000.
Maintenance margin is $16,000 per contract ($32,000 total). Overnight, NQ drops 200 points, which is a $4,000 loss per contract and $8,000 total. Your equity drops to $30,000, below the $32,000 maintenance requirement. You get a margin call before the next session opens.
Using all available margin
Keep at least 50% of your account as free margin. Professional traders rarely use more than 10-20% of available margin.
Confusing day trade margin with overnight margin
Know your broker's cutoff time. If you're holding at that time, you need full overnight margin or you'll be auto-liquidated.
Ignoring margin changes
Exchanges increase margin requirements during volatile periods. Check your broker's margin page regularly, especially before major economic events.