Initial margin is the money that traders need to pay when they open new positions. According to the transaction amount and margin ratio, that is, initial margin = transaction amount and margin ratio. At present, the minimum margin ratio in China is 5% of the transaction amount, which is generally between 3% and 8% internationally. For example, the soybean margin ratio of Dalian Commodity Exchange is 5%. When a customer buys five soybean futures contracts (each 10 ton) at a price of 2,700 yuan/ton, he needs to pay an initial deposit of 6 750 yuan (i.e. 2700x50x5%%) to the exchange.
In the process of holding positions, traders will have floating profits and losses (the difference between settlement price and transaction price) due to the constant changes of market conditions, so the funds actually available in the margin account can be increased or decreased at any time. Floating profit will increase the balance of margin account, while floating loss will decrease the balance of margin account. The minimum balance that must be kept in the margin account is called maintenance margin. Maintenance margin: the settlement price is adjusted to the position, and the margin ratio is adjusted to xk(k is a constant, which is called the maintenance margin ratio, which is usually 0.75 in China). When the book balance of the margin is lower than the maintenance margin, the trader must make up the margin within the specified time to make the margin account balance (settlement price x position x margin ratio), otherwise the exchange or institution has the right to carry out compulsory liquidation on the next trading day. This part of the margin that needs to be replenished is called additional margin. Still according to the above example, suppose that on the third day after the customer bought 50 tons of soybeans at a price of 2700 yuan/ton, the settlement price of soybeans fell to 2600 yuan/ton. Due to the sharp drop in prices, the floating loss of customers is 5000 yuan (that is,