Margin on futures — initial and maintenance

What margin on futures is

This lesson explains what margin on futures is and how to use it: where the initial deposit and maintenance level come from, when a margin call appears, how to calculate leverage from notional and deposit, and how to determine position size from risk rather than free funds. It is for the reader who already knows the contract specification and wants to calculate how much capital one position really occupies.

The deposit is not the cost of entry or the price of the contract you pay. It is collateral that the broker blocks so they have something to cover the current position result. It is also not the maximum loss: during a violent move, the loss can exceed the initial deposit, depending on the market and the broker’s rules. Therefore, the order is fixed — first risk per position, then the deposit. The contract itself, which this deposit secures, is described in the lesson What is futures.

Initial margin versus maintenance margin

Deposit levels are set by the exchange, and the broker may require more than the exchange card shows. They change with market volatility and may differ between months of the same instrument. Check with your broker for the current table for the series you trade — no number in this lesson is a requirement of any provider, and all examples are described as illustrative figures.

It is also worth noting the difference between daily and overnight deposits, which some brokers apply. A position held during the session and a position held overnight may require different collateral. If your plan assumes holding the position longer than one session, plan capital for the higher of the two levels.

How to calculate a margin call

A margin call does not appear from price, but from the relationship of capital to the maintenance threshold. The account comes down to four quantities:

required_margin    = initial margin × number_of_contracts        (from broker table)
maintenance_level  = maintenance margin × number_of_contracts    (from broker table)
equity             = cash balance + unrealized position result
margin_call occurs when equity falls below the maintenance level

To that is added the question of what level the broker demands you return to. Some providers require a top-up only to the maintenance level, others — to the initial level. The difference can be significant:

top_up_to_maintenance       = maintenance_level − equity
top_up_to_initial           = required_margin − equity

1. Record initial and maintenance for one contract from the broker’s current table. Two numbers, one source, one read date.
2. Multiply both by the number of contracts. Deposit is required for every open position, so it grows linearly with size.
3. Calculate equity as cash balance plus unrealised result. Profit and loss are counted before the position is closed — that is the essence of mark-to-market.
4. Compare equity with the maintenance level. As long as equity is higher, the position holds. Below the threshold, the broker’s procedure kicks in.
5. Establish to what level the broker requires a top-up. A top-up to the maintenance level is a different amount than a return to the initial deposit.
6. Record the distance to the threshold in risk units. distance_to_threshold_R = (equity − maintenance_level) / 1R_PLN. This number tells you how many losing positions in risk units stand between you and a margin call.

On a CFD, the mechanics are similar in name, but the contract is different: it is an OTC product, not an exchange-traded contract settled by clearing. The lesson CFD or futures sorts this out.

Where leverage comes from — you do not choose it, it results from the deposit

Leverage is not a parameter you set on the futures platform. It results from two numbers: the notional of the position and the required deposit. The lower the deposit for the same notional, the higher the leverage — and the smaller the price move needed to eat the entire collateral.

notional            = price × point_value × number_of_contracts
effective_leverage  = notional / required_margin

From this formula follows a practical consequence that is easy to overlook: as long as you do not know the notional, you do not know your leverage, even if you know the deposit. A change in account capital does not change leverage, but it changes the number of contracts you can afford — and that is exactly why size must come from risk, not from free margin. Comparison with the OTC product: leverage and leverage and margin.

Position size protocol — five numbers

1. Calculate 1R in PLN (Polish złoty) from the technical stop: ticks_to_stop × tick_value × FX_rate. Tick value and tick size come from the instrument card.
2. Set the risk limit per position as a percentage of capital, in line with the 1–2% rule.
3. Calculate the number of contracts: number_of_contracts = floor(risk_limit_PLN / 1R_PLN). Round down, without exceptions.
4. Calculate occupied deposit: initial margin × number_of_contracts, plus a buffer for the typical daily swing in deposit units.
5. Check whether a buffer to the maintenance level remains after opening. If the sum of deposit and buffer brings equity close to the maintenance level, reduce the number of contracts. Collateral is not a budget to be used up.

Steps 4 and 5 are the only places where deposit influences size — and they come after step 3, as a feasibility condition. Never before it.

Example path to a margin call (illustrative numbers)

All values below are illustrative numbers. They show the sequence of actions, not the parameters of a specific contract. Take your own numbers from the broker’s deposit table and instrument card.

notional             = 400,000 USD      (illustrative)
initial margin       = 20,000 USD       (illustrative)
maintenance margin   = 18,000 USD       (illustrative)
effective leverage   = 400,000 / 20,000 = 20

capital              = 25,000 USD       (illustrative)
unrealized result    = -8,000 USD
equity               = 17,000 USD
maintenance level    = 18,000 USD       (from maintenance margin)
equity below level   →  margin call
top_up_to_initial    = 20,000 − 17,000 = 3,000 USD

The same account on five contracts instead of one would require five times the deposit, and the move triggering a margin call would be five times smaller in points. Position size is therefore simultaneously a decision about risk and about the account’s resilience to normal daily fluctuation.

This sequence rarely starts with a bad setup. It starts with step one: setting size based on available deposit instead of the risk limit.

Deposit card — fill it in yourself

The deposit utilisation column is required deposit / equity. If it grows from week to week with the same number of contracts, it means the broker raised requirements or capital dropped — both situations require action before the market does it for you.

When margin says “do not trade”

1. The number of contracts came from free deposit, not from the risk limit. If size was determined by available cash, that is not a plan, only the use of a limit set by the broker.
2. No buffer to the maintenance level remains after opening. The maintenance level sets a boundary, not a target. A position that immediately brings equity close to the threshold has no room for normal daily fluctuation.
3. You do not know the maintenance level for the series you are trading. Requirements change with market volatility and may differ between months. Confirm them with your broker before entering.
4. Deposit utilisation exceeds the threshold recorded in your plan. You set the threshold yourself and record it. If you do not have one, you have no rule — only the impression that “there is still room.”

Common mistakes in deposit management

• Treating free deposit as a budget to be used. Deposit is collateral, so its excess is a reserve, not an invitation.
• Lacking a reserve for rising deposit requirements. In periods of higher volatility, requirements grow, and a comfortable size suddenly needs more cash.
• Counting deposit separately for correlated positions. Two positions in the same direction are usually one risk and one account load, described in the lesson portfolio risk and correlations.
• Confusing futures deposit with CFD deposit. The same words describe different legal mechanisms and different counterparty risk.
• Ignoring the difference between daily and overnight deposit. A plan based on the lower level stops working after switching to holding the position overnight.
• Assuming loss stops at the deposited amount. During a strong move, the result can exceed the initial deposit. Hence size from 1R and buffer, not from the maximum the table allows.

What is next

Deposit sets position boundaries, but it does not explain the cost of holding it. Further steps: term structure, i.e. why successive series have different prices, and rolling contracts, where changing the month also changes the required deposit. Over a longer horizon, daily drawdown limit also helps as an additional constraint beyond the per-position limit.

Measurable exercise

This exercise reduces the deposit to four numbers for one contract: initial deposit, maintenance level, effective leverage, and buffer to threshold expressed in R. Record each measurement in a separate row, and confirm deposit requirements in the broker table at the second read.

1. Read initial and maintenance margin for one series from the broker’s current table and record the read date.
2. Calculate the notional of one contract and the effective leverage as the ratio of notional to required deposit.
3. Calculate the buffer to threshold in R: (equity − maintenance_threshold) / 1R for the planned number of contracts.
4. Repeat the entire calculation after one session and compare both measurements. A discrepancy in deposits means a change in broker requirements or a drop in capital.

Deposit worksheet — fill it in yourself

The “Repeated measurement” column protects against trading on an outdated deposit: broker requirements change together with market volatility, so a value that does not return on the second read requires rechecking the table.

Common questions

Can I lose more than I deposited as margin?

During a strong move, the position result can exceed the initial deposit, depending on the market and broker rules. Therefore, position size is counted from 1R, and a buffer remains on the account — not because loss is limited to the deposit.

How does a deposit on CFD differ from a deposit on futures?

Similar names, different contract: a CFD is an OTC product with the broker as counterparty, while futures is an exchange-traded contract settled by clearing. The costs, limits, and the way the broker can change requirements are all different. Always read the current table from your provider.

Can I choose my own leverage on futures?

Not in the same sense as with OTC products. Leverage results from the ratio of notional to required deposit. You can only change the position size, i.e. the number of contracts, and with it the real risk on the account.

Why calculate deposit utilization and buffer to maintenance level, instead of just watching the stop?

The stop describes the plan for the position, while the deposit describes the account's resilience to everything that happens outside the plan: a price gap, a broker requirement increase, and several positions open at the same time. Two people with the same stop can have completely different resilience if one holds one position and the other five on the same capital. Only combining equity with the maintenance threshold shows how many failed attempts stand between you and forced reduction, and lets you set a size that withstands normal daily fluctuation. This number also changes without your involvement: brokers raise requirements during periods of higher volatility. Deposit values and top-up rules are specific to the broker and the market — confirm them in the current table from your provider before treating them as fixed.