Margin is the required deposit or collateral posted to open and maintain leveraged trading positions. Margin requirements vary by instrument, volatility, and regulatory standards, typically representing a fraction of the total position value. Margin enables traders to control larger positions with smaller capital amounts while protecting brokers and clearinghouses from default risk.

Margin calculations consider historical volatility, correlation analysis, and stress testing to ensure adequate risk coverage. Initial margin is required to open positions, while maintenance margin must be maintained to keep positions open. Understanding margin requirements is essential for leverage calculations, position sizing, and risk management in leveraged trading.

Real-world example: A crude oil futures contract worth $75,000 requires $5,000 initial margin, allowing traders to control the full contract value with 15:1 leverage while providing adequate risk coverage for normal price movements.