Initial margin vs. maintenance margin in futures
Learn how initial and maintenance margin differ, what a margin call means, and how to plan cash for mark-to-market losses without confusing margin with a maximum loss
Direct answer
Initial margin is the amount a clearing firm requires to open a futures position. Maintenance margin is the minimum equity it requires to keep that position open. A drop below maintenance can trigger a request for funds or a liquidation process, even though the margin deposit is not the position's maximum possible loss.
Initial margin is an entry requirement
Before accepting a futures order, the broker or clearing member checks whether your account meets the current initial-margin requirement. The amount depends on the contract, account type, portfolio offsets, volatility, and house rules. It is a performance bond for the position, not a down payment that buys the underlying.
Futures margin and leverage explains why a small deposit controls larger notional exposure. Futures margin vs. stock margin compares the conventions.
Maintenance margin is the keep-open threshold
After entry, the account is marked to market as prices change. Maintenance margin is the minimum equity threshold used to keep the position. If losses reduce equity below it, the broker may request funds, reduce the position, or liquidate it under its agreement and risk procedures.
The exact trigger varies. Some firms use intraday or real-time checks, while others apply separate overnight requirements. Intraday vs. overnight futures margin covers the timing distinction.
Numerical example
Assume initial margin is $8,000 and maintenance margin is $6,000. You deposit $8,000 and the position loses $1,500 through settlement:
1. Equity becomes $6,500, still above maintenance 2. A further $700 loss takes equity to $5,800, below maintenance 3. The broker may issue a call or take risk-reducing action; the top-up depends on its rules and current requirements
The $8,000 deposit did not cap the loss at $8,000. Futures losses can exceed initial margin, and additional funds may be required quickly.
Mark-to-market makes timing important
Futures gains and losses are settled through the clearing process rather than waiting for expiration. A profitable position can still face a temporary equity shortfall after a reversal. [Futures mark-to-market](/learn/futures-mark-to-market-explained) explains daily settlement.
Check the broker's current available-to-trade, available-to-withdraw, intraday, and overnight values. Each may use a different risk calculation.
Margin is not maximum loss
Notional value, initial margin, maintenance margin, and maximum loss are different numbers. A stop order does not guarantee an exit price during a gap or illiquid market. Margin call vs. forced liquidation explains what can happen below a threshold, while why futures margin requirements change covers volatility and broker-policy changes.
Before entry, record contract multiplier, tick value, notional value, both margin levels, settlement times, and liquidation policy. Stress adverse prices, including a gap larger than the planned stop, and keep a cash buffer beyond the opening requirement.
This guide explains futures margin mechanics for education. It is not a recommendation. Confirm current exchange notices, broker terms, contract specifications, settlement, and liquidation policy before trading.
Common questions
Is initial margin returned when I close a futures position?
The margin hold is generally released after the position and settlement obligations are closed, subject to the broker's process. Realized P&L, fees, and other positions still affect equity.
What happens below maintenance margin?
The broker may request funds, reduce the position, or liquidate it. Timing and amount depend on the agreement, risk checks, and current requirements.
Can futures losses exceed initial margin?
Yes. Margin is collateral for leveraged notional exposure, not a loss cap. A fast move or gap can create losses larger than the deposit.
Why are intraday and overnight margins different?
The broker may use different risk horizons and liquidity assumptions. A position that fits an intraday requirement may need more funds before overnight trading.
How much cash buffer should I keep?
There is no universal amount. Stress tick value and plausible gaps, include fees and other positions, and follow current broker requirements rather than using opening margin alone.