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Intraday margin

The reduced margin a broker requires for positions opened and closed within the same session, often a small fraction of the exchange's overnight requirement.

Exchanges set initial-margin for positions held overnight. Brokers may, at their own risk, require far less during the day because they can force a flat position before the close. The discount is a broker decision, not an exchange one, and it can be withdrawn without notice.

The gap creates the most common retail futures accident. A trader sized to intraday margin who decides to hold overnight is suddenly short of the full requirement and gets liquidated at the session change, often at the worst price of the day.

Intraday margin is also usually suspended around major economic releases and before holidays, exactly when a trader is most likely to be caught out.

Example: exchange overnight margin on one ES contract might be around $13,000 while a broker allows $500 intraday. A $10,000 account can hold twenty ES during the day but not one overnight, a difference of $1.1 million in notional-value versus $56,000.

Related: day-trading-margin, initial-margin, overnight-margin, auto-liquidation, notional-leverage

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Margin and leverageA small deposit controlling a much larger position, and the point at which losses trigger a margin call.Position you controlnotional value $100,000your margin deposit: $5,000$100,000 / $5,000 = 20:1 leverageYour deposit absorbs every dollar of loss$5,000$2,500$0Equity leftMARGIN CALLequity has fallen to $2,5000%1%2%2.5%3%4%5%How far the price moves against you
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.

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