Differentiate between ‘Initial Margin’ and ‘Maintenance Margin’.
Initial margin is the minimum amount of capital (collateral) a trader must deposit to open a new leveraged position. It acts as a security deposit.
Maintenance margin is the minimum amount of equity required to be held in the margin account to keep the position open. If the account equity drops below the maintenance margin due to losses, a margin call is triggered.
The initial margin is always greater than or equal to the maintenance margin.
