Margin

Margin is the capital you must deposit or have available to open a leveraged position. Think of it as a good-faith deposit — not a fee, but a portion of your account reserved to cover potential losses.

Types of Margin

Initial Margin

The amount required to open a new position. For example, trading 1 ES futures contract might require $13,200 in initial margin.

Maintenance Margin

The minimum amount that must remain in your account to keep the position open (typically 80-90% of initial margin). If your account drops below this, you receive a margin call.

Day Trading Margin

Reduced margin for positions opened and closed within the same session. Many brokers and prop firms offer 50% or even 25% of the standard initial margin for day trades.

Margin Call

A margin call occurs when your account equity falls below the maintenance margin requirement:

1. You receive a notification to deposit more funds
2. If you don't, the broker/platform will close positions automatically
3. In prop trading, a margin call usually means you've breached a rule

Margin in Prop Trading

Prop firms set their own margin requirements:

• During evaluation: Often standard exchange margins apply
• Funded accounts: May offer reduced margins for day trading
• Risk check: Firms use margin as an additional guardrail on top of drawdown rules

Example: ES Futures

| | Amount |

|---|---|

| Contract value | ~$250,000 |

| Initial margin | $13,200 |

| Day trade margin | $6,600 |

| Leverage ratio | ~19:1 |