Margin on Futures
In the futures market, margin is a lot different than in the stock market. In futures trading, margin refers to the initial deposit of "good faith" money made into an account in order to enter into a futures contract. It is called good faith because it is the money that is used to debit any daily losses.Initial Margin is the original and minimum amount of money that is required to be deposited into a futures account. The amount in your margin account will change daily depending upon how the market is responding in relation to your futures contract.
Maintenance Margin is the lowest amount your account can go before it needs to be replenished. If your margin account drops to a certain level because of a series of daily losses, brokers are required to make a margin call and request that you make an additional deposit into your account to bring the margin back up to the initial amount (initial margin). If you get a margin call it is important that the funds are available immediately. If they aren't the broker have the right to liquidate your position completely in order to make up for any losses they may have incurred on your behalf.
