What is Initial margin requirement?

The initial margin requirement is the amount of capital a trader must have on its account to open a trading position when trading on margin. The size of the initial margin requirement is estimated based on the position size and leverage.

The initial margin requirement covers a percentage of the purchasing price and, ultimately, the position’s value. The exchange or the broker sets it. It serves as a form of collateral to cover potential losses that could appear in the trading process.