Why Is the Initial Margin Always Greater than the Maintenance Margin?

The initial margin is always greater than the maintenance margin to create a buffer against small, adverse price movements. This buffer allows the trader to absorb minor losses without immediately triggering liquidation.

It gives the trader time to react and potentially add more funds if the market moves against them significantly, protecting both the trader and the exchange.

Why Is the Maintenance Margin Typically a Percentage of the Initial Margin?
What Specific Action Is Triggered When the Margin Balance Falls below the Maintenance Margin Level?
How Does the Margin Call Price Relate to the Liquidation Price?
Why Is Maintenance Margin Always Lower than Initial Margin?
Why Is the Initial Margin Always Higher than the Maintenance Margin?
What Is the Primary Purpose of the Buffer between Initial and Maintenance Margin?
Why Do Exchanges Set the Maintenance Margin Lower than the Initial Margin?
Is Maintenance Margin Typically Higher or Lower than Initial Margin?