When a trader trades ‘on margin,’ they only pay a portion of the investment’s price while purchasing a large volume of securities. This style of trading is common for forex traders and trading futures. When trading futures on margin, the requirements for the same can range between 3% and 12% of the contract’s value. In margin trading for futures, it is important to learn two terms: initial margin and maintenance margin. The initial margin for a futures trade is the amount deposited with the broker by the trader such that they can take up a trade.

Once the initial margin is set, the maintenance margin is the monetary amount that a trader needs to have on deposit within their trading account. If the trader does not have this amount in their account, they cannot continue holding onto their position. The maintenance margin tends to be between 50% to 75% of the initial margin amount. In the scenario where the funds in the trader’s margin account fall under the maintenance level, the trader will receive a notification in the form of a margin call that requires them to urgently add more trading funds.