The ratio of a futures position's full contract value to the account equity backing it — the honest measure of how levered a futures trader really is.
Margin is a deposit, not a purchase price, so a futures account's risk is not described by how much margin is used. What matters is notional-value against equity: control $500,000 of index exposure with $50,000 of equity and you are ten times levered whether margin usage looks like 20% or 90%.
Framing it this way converts futures risk into terms every trader already understands. Ten times leverage means a 1% index move is a 10% account move, and a 10% index move against you wipes the account out.
Example: one MES contract at 5,000 is 5 x 5,000 = $25,000 notional. In a $10,000 account that is 2.5x leverage. Four MES is $100,000 notional, 10x leverage, and a 2% index drop is a 20% account drawdown with only about $2,000 of margin in use.
Original diagrams for the ideas on this page. Illustrative, not real market data.
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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