How to Trade Futures with Proper Margin Management
Master futures margin requirements, position sizing, and risk controls to trade with confidence.
Futures Margin Basics
Key Concepts:
- Initial Margin: Required to open position
Typically 5-10% of contract value
- Maintenance Margin: Minimum to keep open
Usually 75-80% of initial margin
- Mark-to-Market: Daily P&L settlement
Losses deducted, gains added daily
Margin Call Warning:
If your account falls below maintenance margin, brokers will liquidate positions to protect account equity. Always maintain adequate margin buffer!
Position Sizing Formula
Risk-Based Sizing:
Step 1: Calculate Risk per Contract
Risk = Tick Value × Stop Distance in Ticks
Example: ES futures, $12.50/tick, 20-tick stop = $250 risk
Step 2: Determine Account Risk
Target 1-2% of account equity per trade
$10,000 account × 1% = $100 max risk
Step 3: Size Position
Contracts = Account Risk ÷ Risk per Contract
$100 ÷ $250 = Use micro futures (1/10 size)
Risk Management Tools
Essential Tools:
- • Hard Stops: Always use stop-loss orders
- • Daily Loss Limits: Max loss per day
- • Position Limits: Max contracts per trade
- • Correlation Limits: Avoid stacking similar bets
Popular Contracts:
- • ES (S&P 500): $12.50/tick, high liquidity
- • NQ (Nasdaq): $5/tick, tech exposure
- • CL (Crude Oil): $10/tick, energy sector
- • GC (Gold): $10/tick, safe haven
FAQ
Why did my position get liquidated?
You breached maintenance margin requirements. Brokers automatically close positions to protect account equity when margin falls too low.
Are micro futures better for small accounts?
Yes—micro futures have 1/10 the size and tick value of standard contracts, allowing for better risk control and position sizing.
What about overnight margin requirements?
Many contracts require higher margin overnight. Check your broker's margin schedule and plan accordingly.