Futures
Futures Margin: Initial, Maintenance and Day Rates
By MarketsBench · Published · 4 min read
Step 3 of 3 in Futures Essentials.
Futures margin is not a loan and not a down payment. It is a performance bond — a good-faith deposit the exchange holds to cover a day's plausible loss on the contract. Nothing is borrowed, no interest is charged, and the deposit is returned when the position closes.
That difference matters, because the stock-market intuition of "margin equals borrowed money" leads to the wrong conclusions about everything downstream.
Three margin numbers
Initial margin — required to open a position. Set by the exchange (CME for the index, energy and metals contracts), often raised by your broker.
Maintenance margin — the equity level the position must stay above once open. Slightly below initial, typically 85–95% of it. Drop under it and you get a margin call: deposit funds or the position is reduced.
Day-trading margin — a broker-set number, far lower than exchange initial margin, applying only to positions opened and closed within the session. It is a broker's private risk decision, not an exchange rule, and it evaporates at the close.
Exchange margins are revised whenever volatility changes — sometimes with a day's notice, and typically upward in exactly the conditions where you least want a larger deposit demanded. Always pull current figures from your broker rather than trusting a number you memorised.
Roughly what to expect
Margin is set per contract in dollars, but it is easier to reason about as a fraction of notional. Across the liquid index and commodity contracts, initial margin usually falls between 3% and 12% of contract value, with the higher end during volatile periods.
| Contract | Notional (illustrative) | Initial margin at 5% | At 10% |
|---|---|---|---|
| ES at 5,000 | $250,000 | $12,500 | $25,000 |
| MES at 5,000 | $25,000 | $1,250 | $2,500 |
| NQ at 18,000 | $360,000 | $18,000 | $36,000 |
| MNQ at 18,000 | $36,000 | $1,800 | $3,600 |
| CL at $75 | $75,000 | $3,750 | $7,500 |
Treat these as a sense of scale, not as quotes. Day-trading margin at many brokers runs a fraction of these figures — sometimes a few hundred dollars for an e-mini — which is precisely where the danger lies.
Why cheap day-trading margin is dangerous
A broker offering $500 day-trading margin on ES is not saying the contract is safe. It is saying it will liquidate you quickly if it goes wrong.
Consider a $5,000 account, one ES contract at $500 day margin. ES moves 20 points against you — an unremarkable intraday range:
20 points × $50 = $1,000 lost — 20% of the account
Forty points and you are down 40%. The margin requirement never protected you; it only determined whether you were allowed to enter. Margin sets the minimum account balance to open a trade. Your stop sets the loss. These are independent numbers, and confusing them is the most reliable way to lose a futures account.
The correct sizing question is never "can I afford the margin?" It is "does one contract's stop distance fit inside my risk budget?" Margin affordability is a necessary condition, not a sufficient one.
Margin calls and auto-liquidation
When equity falls below maintenance margin:
- The broker issues a call — deposit funds or reduce the position.
- Intraday, most retail futures brokers do not wait. They auto-liquidate at a set threshold, often when equity approaches the day-trading margin requirement.
- Held into the close, positions must meet the full overnight initial margin. This catches people out: a position that was fine all day on $500 day margin needs the full exchange requirement at settlement, and brokers flatten positions that cannot cover it.
Liquidation happens at market, in whatever conditions caused the problem. Assume a poor fill.
Rules that keep margin uneventful
- Size from the stop, then check margin fits. Never the reverse.
- Keep used margin under a quarter of equity. It leaves room for adverse moves and for the exchange raising requirements mid-position.
- Know your overnight requirement before the close, every time you consider holding a day trade into the next session.
- Plan for margin increases. Volatility spikes and requirements rise together. A position sized to the last of your available margin gets liquidated by an administrative change, not by the market.
- Use micros to get precision. MES margin is a tenth of ES, which lets a modest account hold a position with real headroom instead of scraping the requirement.