Maintenance margin in gold trading
Maintenance margin is the minimum equity you must keep per gold futures contract after opening; if equity falls below it, you must top up to the initial margin.
Also called Maintenance requirement, Variation margin, Initial margin
Maintenance margin is the minimum account equity required to keep a futures position open. It is lower than the initial margin, the amount required to open the position. If losses take equity below the maintenance level, the account receives a margin call and must deposit enough to restore the initial margin, or the position may be reduced or closed. Profits and losses are settled daily through variation margin.
How it applies to gold trading
Exchanges set margin for GC and MGC and change it when volatility changes, often raising requirements after big gold moves. Brokers can require more than the exchange minimum, and intraday margins may be lower than overnight margins. A trader whose account sits close to maintenance can be forced out by an ordinary pullback.
Unlike CFDs, futures losses are marked to market at each daily settlement, so a losing position draws on cash every day, not just when it is closed.
Worked example
Example (hypothetical numbers): a GC contract has initial margin of $15,000 and maintenance of $13,600. A trader with $16,000 buys one contract at 4,000. Gold falls $25 to 3,975, a $2,500 loss, leaving $13,500, below maintenance. The trader must deposit $1,500 to restore $15,000, or reduce the position.
A common mistake
Trading futures with only the initial margin in the account. Any small move against the position triggers a call.
See also: Margin, Margin call, GC futures, Micro gold futures.
Frequently asked questions
What is the difference between initial and maintenance margin?
Initial margin is required to open a futures position; maintenance margin is the lower minimum to keep it open. Falling below maintenance triggers a call back to the initial level.
Can exchange margins on gold change?
Yes. Exchanges adjust them, often raising requirements after periods of high volatility.
Is futures margin the same as CFD margin?
Both are deposits, but futures use exchange-set initial and maintenance levels with daily settlement, while CFD margin depends on platform leverage.