Initial margin is the equity or collateral required before a leveraged securities, futures, or derivatives position can be opened.
Initial margin is the equity, cash, or collateral required to open a leveraged position. In a securities margin account, it limits how much of a purchase can be financed with broker credit; in futures and derivatives markets, it often works as performance collateral for the contract.
Initial margin matters because it sets the starting leverage of a trade. A position that meets the opening requirement can still become unsafe later if prices move, volatility rises, or maintenance requirements change.
Suppose a broker requires $6,000 of investor equity to open a $12,000 stock position in a margin account. The investor may be able to finance the rest with a margin loan if the account and security are eligible.
That opening calculation does not answer what happens later. If the stock falls or the broker raises the requirement, the account may need more equity even though the initial trade was accepted.
| Feature | Initial margin | Maintenance margin |
|---|---|---|
| Timing | Checked when opening or increasing a position | Checked after the position is open |
| Main purpose | Limits starting leverage | Keeps account equity above an ongoing threshold |
| Trigger | New trade, position increase, or new contract | Price movement, volatility, requirement change, or collateral change |
| Failure result | Order may be rejected or require more equity | Margin call, restriction, or liquidation can follow |