What Happens to the Initial Margin When a Futures Contract Is Closed? ⎊ Path

What Happens to the Initial Margin When a Futures Contract Is Closed?

When a futures contract is closed, the initial margin is released back to the trader's available balance. If the contract was closed at a profit, the margin plus the profit is returned.

If closed at a loss, the loss is deducted from the margin, and the remainder is returned. The initial margin itself is not a cost, but collateral.

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Glossar

Initial Margin

Collateral ⎊ Initial margin represents the equity a trader must deposit with a broker or exchange as a good faith commitment to cover potential losses arising from derivative positions, notably within cryptocurrency markets.

Futures Contract

Leverage ⎊ Futures contracts in cryptocurrency represent agreements to buy or sell an underlying asset at a predetermined price on a future date, functioning as a derivative instrument that allows for amplified exposure without immediate asset ownership.