In simplest terms, the futures margin is the minimum amount of funds required in your trading account to initiate a buy or sell futures position. This margin is usually a fraction of the contracts’ total value. The actual amount varies from market to market and typically differs if the trader is doing a day trade or holding the position overnight.
Margin allows for trading with high leverage which is actually a crucial instrument in the futures market. With leverage, you don’t need to put up 100% of the futures contract’s value amount when initiating a trade. Instead, you can use your margin amount to enter large positions and continue to trade as long as your account remains funded.
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0:00 Music Intro
0:26 Intro
1:30 What is futures margin?
2:40 Futures margin vs securities margin
4:30 Types of futures margin
8:00 Margin call
11:00 Calculating margins
12:57 CME SPAN parameters
14:08 Benefits
15:19 Drawbacks
14:33 Conclusion