Initial margin
Initial margin is the collateral that must be in the account when a futures position is opened, a performance bond sized by the clearing house to cover the loss a position could plausibly suffer before it is closed or re-margined. It is not a down payment on the contract, and the position can lose more than it.
Senzoukria · Glossary · Updated September 2026
Definition
The CFTC glossary defines initial margin as customers' funds put up as security for a guarantee of contract fulfilment at the time a futures market position is established. The clearing house publishes a minimum per product, computed from how far the contract's price can move over a short horizon at a chosen confidence level. Brokers, as futures commission merchants, may require more.
What it is and is not
- It is collateral: it stays yours and is released when the position is closed.
- It is not a price paid for the contract; nothing is bought with it.
- It is not a maximum loss: a move larger than the one it was sized for costs more than the margin posted.
- It changes: clearing houses revise requirements when volatility changes, and brokers adjust their own rates around events.
Illustrative example
The figures below are hypothetical and chosen for the arithmetic, not current requirements. Suppose an initial margin of $1,000 per contract on a product whose notional value is $25,000. The collateral is 1,000 / 25,000 = 4 percent of the exposure, so each 1 percent move in the underlying changes the position by $250, a quarter of the margin posted. A 4 percent adverse move would consume the whole amount.
Why it matters to an intraday trader
Margin determines how many contracts an account is allowed to hold, not how many it should hold. Sizing to the maximum the margin permits ties the position's risk to the clearing house's model rather than to the trader's stop. Many brokers offer lower intraday margins that revert to the full requirement before the close, which the existing entry on day and overnight margin covers in detail.
In Senzoukria
The desktop application does not compute or display margin requirements; the broker's platform and statements are the source. What it offers alongside are order-size guards: a 'Contracts per order' cap in the trading settings and a separate 'Max contracts' field for the autopilot.
Common mistakes
- Reading the margin as the cost or the risk of the trade.
- Assuming the broker's figure equals the clearing house minimum.
- Sizing a position so that margin, not the stop, sets the number of contracts.
Related
In the same section
- Initiative activity
- Initial balance
- Insurance fund
- Index price
- Intercommodity spread
- Index futures
- Intrabar ambiguity
- Index arbitrage
Sources
- CFTC glossary (2026-09-25)
This page in other languages
Frequently asked questions
- Who sets initial margin?
- The clearing house sets the minimum for each product and publishes changes when it revises them. Futures commission merchants can require more from their customers, and that house requirement is the number the account actually faces.
- Is initial margin returned when I close the trade?
- Yes. It is collateral, released when the position is closed. What is not returned is variation margin already debited for losses, because that was the loss itself.