Futures Margin Explained: Initial, Maintenance, and How P&L Is Calculated

What margin is

Futures let you trade by posting only a fraction of the contract’s full notional value — the margin — rather than the entire amount. A contract worth tens of thousands of dollars might require only a few thousand in margin, and that ratio is what we call leverage. Because you control a large position with a small amount of capital, both gains and losses are magnified by the same ratio.

Initial margin vs. maintenance margin

Term	Meaning
Initial margin	The minimum margin required to open a new position.
Maintenance margin	The minimum equity your account must keep to hold the position open. It is usually lower than the initial margin.

After you enter, if open losses build up and your account equity falls below the maintenance margin, you receive a margin call (a demand to add funds). If you cannot top up, the position is closed out through forced liquidation (a stop-out). Margin requirements are not fixed — exchanges and brokers can adjust them at any time depending on volatility and market conditions.

Tick values and calculating P&L

Futures P&L moves in increments called ticks. One tick is the smallest price increment a contract can move, and the dollar amount you gain or lose per tick is the tick value. P&L is calculated as follows.

For example, suppose a contract has a tick size of 0.25 and a tick value of $5. If the price moves 2.00 in your favor, the P&L on one contract is (2.00 ÷ 0.25) × $5 = 8 ticks × $5 = $40. (Tick size and tick value differ by product, so always confirm the exact figures in that contract’s specifications.)

How leverage relates to liquidation

The smaller your margin (the higher your leverage), the shorter the distance to liquidation for the same dollar loss. In other words, a relatively small adverse move can be enough to breach maintenance margin and trigger a stop-out. That is why disciplined traders avoid oversizing their contract count and decide in advance how much they are willing to lose on a single trade.

• Set a per-trade loss limit first — cap it at a fixed percentage of the account (for example, 1–2%).
• Size from your stop distance — work backward so that “ticks to your stop × tick value” does not exceed that loss limit.
• Keep margin headroom — running your available margin too tight leaves you exposed to immediate liquidation when volatility expands.

This is educational information only, not investment advice. Risk is inherent in leveraged trading, and you can lose more than your initial deposit.

Watch free margin drain in real time

Initial and maintenance margin stay two rows in a table until you watch one eat into the other. In Merini’s free web demo the margin calculation updates as you build the order, and once the position is open you can follow equity and free margin moving with every tick against a trade that is going the wrong way. Push it far enough on virtual money and you will meet the margin call and the forced close yourself — a considerably better place to meet them than on funded capital → Watch margin move

Frequently asked questions

Is margin a fixed amount?

No. Exchanges and brokers can raise or lower margin requirements based on volatility and market conditions. Requirements are often increased around major events or periods of heightened risk.

What happens if I get a margin call?

You need to deposit additional margin or reduce your position size. If you do not respond, the position may be force-liquidated according to your broker’s rules.

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