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Postby pooja923 » Wed May 18, 2016 5:24 am

If the margin falls below the maintenance margin, funds must be deposited to bring it back up to the maintenance
margin level or Initial margin level ??

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Re: Equity

Postby edupristine » Wed May 18, 2016 6:08 am

Hi Pooja

Initial margin is that minimum amount of cash that must reside in the trader's trading account the first day that he establishes a futures position, whether long or short, and ranges from 2% to 20% of the market value of the futures position, although it can be less. Maintenance margin is that minimum amount of cash that must reside in the trading account the second day and every subsequent day so long as the trader continues to carry the futures position. Maintenance margin is usually less than initial margin, so the amount of cash one needs to carry a position is less than that required to establish the position.

If total equity in his account falls below the maintenance margin level, then he will be required to close open positions or to deposit additional funds in his trading account to bring the equity level back up to the initial margin level.

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