The performance bond is the bond deposited in the trading account by the buyers and sellers of futures contracts or option sellers to ensure the performance of the contracts. Commodity futures deposit is not a stock payment, nor a deposit for trading commodities, but a good reputation deposit.
Performance bond is a kind of financial guarantee for buyers and sellers to ensure performance. Traders in the futures market must deposit a certain amount of performance bond when trading. The amount of bonds is set by the exchange that provides contract transactions, usually 5- 18% of the total contract value. Of course, dealers or entrusted brokers will also set an additional margin on their own, which will not be lower than the level set by the exchange. In addition, the margin level is also affected by the market transaction risk. In a volatile market, you usually have to pay more margin. At the same time, the margin of hedging and speculative trading is different. Generally, the deposit received by the former is relatively low. Margin is divided into initial margin and additional margin. The initial margin is the margin paid by the trader before the transaction. Due to price changes, the book losses suffered by traders are deducted from the margin. As a result, the profit rate drops. When the margin falls to the lower limit (generally stipulated by the exchange), the broker requires the trader to pay a part of the margin to make the account reach the initial margin level. This extra part is called extra margin.