Futures Margin and Daily Settlement

Written by Greg, founder of FTMarketWatch — a former licensed commodities trader.

Last reviewed: September 2, 2026

Futures margin is collateral, not a down payment on the underlying asset. Because futures positions are marked to market, gains and losses are added to or taken from the account as prices move.

Initial margin vs maintenance margin

• Initial margin is the amount required to open a position.
• Maintenance margin is the minimum equity that must be maintained.

If account equity falls below the maintenance requirement, the broker may require additional funds or reduce the position.

What is variation margin?

Variation margin is the money transferred because of daily gains and losses. In practical terms, a losing futures position reduces account equity and a winning position increases it. This daily settlement is one reason futures risk can become visible very quickly.

Simple example

You deposit $6,000 to support a futures position. The position loses $900 during the trading day. Ignoring fees and other positions, the account has effectively fallen to $5,100. If that is below the broker's maintenance requirement, additional funds may be required.

Why leverage matters

Because the margin deposit can be much smaller than the contract's notional value, a modest move in the underlying market can create a large percentage gain or loss relative to the cash posted.