Futures Margin and Leverage

Futures margin is a good-faith deposit, not a loan, and it allows very high leverage. Here is how initial and maintenance margin work, how daily settlement moves cash and how fast losses can pile up.

A deposit, not a down payment

Futures margin is collateral that guarantees you can cover daily losses. It is set by the exchange, often roughly 5% to 10% of the contract’s value, and brokers may require more. Unlike stock margin, you are not borrowing money, but the leverage is much higher: a small deposit controls a large exposure.

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