What Is the Purpose of a “Maintenance Margin” in Futures Trading?
The maintenance margin is the minimum equity level that a trader must maintain in their margin account after the initial trade. Its purpose is to ensure there is sufficient collateral to cover potential losses from adverse price movements.
If the account equity falls below this level due to the daily mark-to-market process, a margin call is issued, requiring the trader to deposit additional funds to bring the account back up to the initial margin level.
