What are margin requirements & how do they work?
• Margin is the amount of money set aside in your account to trade a specific contract. For instance, if you have a $3000 account and you purchase a contract of corn, $540 is set aside in your account to trade that contract (the initial margin). Now your excess to trade is $2460. Keep in mind that your excess to trade changes along with your open trade equity. If you make or lose $200 that day, is added or subtracted to your margin excess (available funds to trade with). • What is the difference between initial & maintenance margin? • Initial margin is the amount of money set aside to trade a specific contract. The maintenance margin is the level at which a margin call is triggered. For instance, if you have a $3000 account and you purchase a contract of corn, the total equity changes as the market moves for or against you. If the market moves against you by 10 cents or $500-your total equity is now $3000-$500 or $2500. If the total equity in the account drops below the maintenance mar
