Why Is the Maintenance Margin Always Lower than the Initial Margin?
The maintenance margin is set lower than the initial margin to provide a safety buffer for the trader and the broker. The initial margin ensures the trader has sufficient collateral to open the position.
The difference between the two is the cushion for adverse price movements. If the maintenance margin were equal to the initial margin, a loss of even a single dollar would immediately trigger a margin call, making the position highly unstable and impractical to manage.
