What Is the Role of Margin in Trading Perpetual Futures Contracts?

Margin is the collateral deposited by a trader to open and maintain a leveraged position in a perpetual futures contract. It is essential because it covers potential losses and acts as a guarantee for the exchange.

Initial margin is required to open a position, while maintenance margin is the minimum equity needed to keep the position open. Trading on margin allows for leverage, amplifying both potential profits and losses.