UNDERSTANDING MARGIN CALLS

Initial margin is the cash required to open a futures position — typically 5–15% of the contract's notional value, set by the exchange. Maintenance margin is the minimum cash that must remain in your account while the position is open, usually 75–90% of initial.

If a losing trade pushes your account equity below the maintenance margin, you get a margin call. You have two choices: deposit more cash, or close the position. Most brokers will auto-liquidate without asking if you don't act fast — and they'll do it at market, often at the worst possible price.

The math example that scares people straight: ES initial margin around $13,200, maintenance around $12,000. If you have a $15,000 account and one ES contract, a 2.5% adverse move (60 ES points) drops your equity below maintenance and triggers a call. That's a single bad day.

The fix isn't more capital — it's smaller positions. If you size so that your stop-loss equals 1% of account equity, you'll never see a margin call. Size for the worst-case adverse move you'll allow before exiting, not for the maximum number of contracts the broker will let you carry.