Margin calculation explained

Margin calculation is the process of determining the amount of capital required to open and maintain a trading position. It is usually calculated as a percentage of the total trade value. For example, if the initial margin requirement is 10% for a contract worth $10,000, the margin required to open the position would be $1,000. The maintenance margin is the minimum balance needed to keep the position open. If the account value drops below this threshold, a margin call is triggered. Leverage allows traders to control larger positions with less capital, amplifying both potential profits and losses.