Glossary · I
What is Initial margin?
The deposit required to open a futures position; collateral, not the price of the contract. Set by the exchange (with brokers often adding their own requirements) and changed from time to time.
In context
When you buy a futures contract, you do not pay its full value. The exchange sets an initial margin: an amount of money that must be in your account, set aside as collateral, to show you can cover likely losses. CME's own educational material describes futures margins as typically a small percentage of the contract's value, often in the range of roughly 3% to 12%.
Learn it in depth
- Chapter 0: Trading from Zero: Markets, Gold, CFDs and Futures
- Chapter 1: The Gold Futures Contract and the Trading Day
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