Futures initial margin and maintenance margin
I just a had a quick question about margin in a Futures contract.
Suppose, that I have a Futures contract that requires an initial margin of 00 and a maintenance margin of 0. Suppose that after a series of losses, my maintenance margin falls bellow 0, to 0. Then why do I have to replenish my account to the initial margin rather than the maintenance margin?
Thanks
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From All About Futures Margin
Margin Maintenance is the amount of money where a loss on your futures position requires you to allocate more funds to bring the margin back to the initial margin level.
Consider if you simply needed to deposit to get above the maintenance margin but no more, the number of margin calls would be far more frequent. The current system of needing to bump account to initial margin avoids that.
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