What Is Margin and How Is It Related to Leverage in Futures Trading?

Margin is the collateral a trader must deposit with the exchange to open and maintain a leveraged futures position. It is a fraction of the total contract value.

Leverage is the ratio of the total contract value to the required margin. For example, 10x leverage means the margin is 1/10th of the position's notional value.

Margin acts as a good-faith deposit and a buffer against potential losses, enabling traders to control a larger position than their capital would otherwise allow.