How Do Leverage Ratios Influence Initial Margin Requirements?

Leverage is inversely related to initial margin. A higher leverage ratio (e.g.

50x) means a smaller initial margin percentage is required (e.g. 2%).

Conversely, a lower leverage ratio (e.g. 10x) requires a larger initial margin percentage (e.g.

10%). The margin ensures the trader can cover potential losses proportional to the risk taken.