Futures margin: capital requirements

Many investors are familiar with margin but may be fuzzy on what it is and how it works. That's understandable, because margin rules differ across asset classes, brokerages, and exchanges.

What is futures margin, and what is a margin call? Much like margin in trading stocks, futures margin—also known unofficially as a performance bond—allows you to pay less than the full notional value of a trade, offering more efficient use of capital. Futures margin is simply leverage that can enhance returns; however, it can also exacerbate losses, which is why it's important to use proper risk management.