Maintenance Margin

After an investor opens a leveraged position with initial margin, the value of the account changes as prices move. If losses reduce the account's equity below the maintenance margin, the investor must add money to restore it.

For example, an investor opens a futures position with initial margin of 10,000, and the maintenance margin is 7,500. If the position loses 3,000, the account falls to 7,000, below the maintenance level. The investor receives a margin call and, in futures markets, must typically deposit enough to bring the account back to the initial margin level of 10,000, which means adding 3,000.

For margin purchases of shares, maintenance margin is usually expressed as a percentage of the current market value of the shares, often 25% or more, depending on the broker and regulations.

If the investor does not meet a margin call quickly, the broker can close the position, selling assets at the current market price, potentially locking in a large loss. Maintenance margins are a key reason leveraged trading can lead to forced sales during sharp market falls.