---
title: "Margin and Leverage in Futures | ProFuturesTrader"
url: https://profuturestrader.com/education/margin-and-leverage
description: "How futures margin works: initial and maintenance margin, mark-to-market, margin calls, and why leverage cuts both ways. Educational only."
lang: en
---

How futures work

# Margin and Leverage in Futures

An educational overview of how futures margin works. This is not a recommendation to buy or sell any contract, and it is not a solicitation to open an account. Futures and options trading involves substantial risk of loss and is not suitable for all investors. You can lose more than you deposit.

Futures let you control a large notional value with a smaller amount of cash posted as collateral. That is leverage. It is the feature that makes a one-lot position useful, and it is the feature that can empty an account faster than many newer traders expect. This article explains the mechanics — initial margin, maintenance margin, mark-to-market, and margin calls — without quoting current dollar margin amounts. Those figures are set by the exchange and by your clearing firm (FCM). Both can change, sometimes on short notice. Confirm current requirements with the exchange and the firm before you trade.

This is educational only. Nothing here is a typical result, and nothing here is a recommendation of size.

## Margin is not a down payment

In a stock purchase on cash, you generally pay for the shares. In futures, you do not buy the underlying metal, oil, or index basket when you go long, and you do not sell it when you go short (except if a deliverable contract goes to delivery). You enter a standardized contract. The cash you post is a **performance bond**: collateral to support the position as the market moves.

Because the bond is only a fraction of the notional, a modest percentage move in the futures price can be a large percentage move in the cash in your account. That works in both directions. A favorable move can free equity. An unfavorable move can consume it, and then some.

## Initial margin and maintenance margin

**Initial margin** is the amount generally required to open a position. **Maintenance margin** is the minimum equity you must keep to hold it. Maintenance is typically lower than initial, but the exact relationship is set by the exchange and may be increased by your FCM. Your firm can require more than the exchange minimum. ProFuturesTrader is an introducing broker. It does not hold customer funds or set clearing margins; your account and margin are carried by the futures commission merchant. Intraday requirements can also differ from end-of-day requirements.

If account equity falls below maintenance, you can receive a **margin call** to deposit additional funds, often to restore initial margin. The timing can be short. If you cannot meet the call, the firm can liquidate positions, possibly at a price you would not have chosen, and you remain responsible for any remaining deficit. You can lose more than you deposited.

ProFuturesTrader publishes trading-hours and day-trade margin information, which can change without notice, at https://profuturestrader.com/contract-margins and offers a margin calculator (https://profuturestrader.com/margin-calculator). Those tools are for looking up or exploring figures that change. They are not a promise that a given size is appropriate for you.

## Mark-to-market is daily — and can be faster

Futures positions are **marked to market**. Gains and losses are realized in the account as the settlement price (and, when the firm requires it, as the market moves during the day) changes. You do not wait until you close the trade to “see” the result. A position that is still open can already have drawn cash out of the account.

That is different from a cash stock position that simply shows an unrealized gain or loss. In futures, variation can require more funds while you still hold the trade — including when a hedge is doing what you intended on paper, because the futures side is collateralized separately from the thing you are hedging. For that issue, see Hedging Basics in Futures (https://profuturestrader.com/education/hedging-basics).

## Leverage is a multiplier, not a cushion

A quick way to see the effect is to compare the notional with a price move, not with the margin number.

**Hypothetical example (for illustration only — not a current market price, not a current margin, and not a projection of results):** Suppose the front-month E-mini S&P 500 (ES) is at 5,000.00. One ES contract has a notional of 5,000 × $50 = $250,000. A 2% move, 100 points, is $5,000 per contract (100 × $50), before costs. On one Micro E-mini (MES) contract, the same 100-point move is $500. Ten MES contracts would match the $5,000 ES result in this example. If the cash posted to hold the position were, hypothetically, a small fraction of that notional, a 2% index move would be a much larger percentage of the cash in the account. The fraction changes when margins change. The point of the sketch is the multiplier, not a recommended size. Contract facts for ES and MES are summarized in S&P 500 E-mini Futures (ES): A Practical Guide (https://profuturestrader.com/education/sp500-e-mini-futures).

The same arithmetic applies to metals and crude. A $1 move in gold is $10 per Micro Gold contract and $100 per full-size Gold contract, as explained in Micro Gold, Micro Silver, and 1-Ounce Gold Futures (https://profuturestrader.com/education/micro-metals-gold-silver-1oz). A $1 move in WTI is $100 per Micro WTI (MCL) contract and $1,000 per full-size CL contract, as explained in Crude Oil Futures Basics (https://profuturestrader.com/education/crude-oil-futures-basics). Stacking contracts multiplies those amounts.

## Why this article does not list today’s margins

CME Group publishes exchange margin requirements and updates them. Your FCM may add a buffer. A number written into an educational article would be wrong the next time either one changes — and those changes often arrive when markets are already moving. Treat any margin figure you see on a website, including ours, as a snapshot to be confirmed, not as a fixed cost of doing business.

Related reading on this site includes Contract Margins Explained (https://profuturestrader.com/blog/margins-explained), Futures Leverage Risks Explained (https://profuturestrader.com/blog/futures-leverage-risks-explained), and Handling the Dreaded Margin Call (https://profuturestrader.com/blog/handling-the-dreaded-margin-call). Those posts are additional education, not a substitute for the firm’s current requirements.

## Position size comes first

A practical way to think about size is to work backward from a loss you can tolerate, in dollars, and from the contract’s tick value — not from “how many contracts the margin will allow.” If the implied size is less than one full-size contract, a micro or 1-ounce contract may fit the dollar risk better, or the idea may not be worth taking. Adding contracts because the bond looks small relative to the notional is how accounts get too big for their equity.

Stops, if you use them, do not cap this problem by themselves. A stop is not a guarantee of a fill at the stop price. In a gap or a fast market, the result can be worse than the stop suggested, and a larger position makes that worse in dollars. See Order Types and Stops (https://profuturestrader.com/education/order-types-and-stops).

Use only genuine risk capital. Money needed for living expenses does not belong in a leveraged futures account.

## How to practice the mechanics

A simulated account will not feel like a real margin call, but it is a reasonable place to watch how a tick of movement changes the P&L on one contract versus several, and to see initial and maintenance figures your platform displays — remembering that demo margin may not match a live account.

ProFuturesTrader offers a **28-day no-cost demo** in a simulated environment: https://profuturestrader.com/demo. Featured platforms are listed at https://profuturestrader.com/platforms. Features and fees can change. Demo accounts use simulated funds. Demo results do not reflect real trading and are not indicative of future results.

## Talk it through, if that would help

If you want to walk through contract size, a demo, or how a smaller contract changes the dollar value of a tick, you can call or email. There is no obligation to open an account.

**Drew Rathgeber**, President
949-996-4611 (9499964611) · drathgeber@profuturestrader.com
Desk: 1-888-776-6359 (18887766359)

You are also welcome at **Rehab for Futures Traders**, a free educational discussion — not counseling or therapy — hosted by Drew: https://profuturestrader.com/rehab-for-futures-traders.

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