Can you help me understand how margin requirements change as a position moves against me?

My broker requires $1000 day margin per es contract. If I have a one contract position that moves

against me $500, does this mean I now need $1500 in my account for margin? Or is it more

complicated than that?

Thanks

opie1 

Can you help me understand how margin requirements change as a position moves against me? My broker requires $1000 day margin per es contract. If I have a one contract position that moves against me $500, does this mean I now need $1500 in my account for margin? Or is it more complicated than that? Thanks

Margin is how much you have in your account. The minimum margin is how much is required per contract for you to be in a position. If all you have in the account is $1,000, and if that is your broker's minimum, you can enter into one contract, but you had better not lose even .01, or you are in trouble because you will go below the minimum and the broker will close you out.

So your margin has to be large enough to cover any losses you have, and still not get drawn down below the minimum. So in your example, yes, you would need to have started with $1,500 if you assume a $500 loss. That's because, as you lose on the position, your loss is charged directly against your margin, which will get drawn down until it hits the limit. The "margin requirement" didn't change, because you are always required to have enough to cover any losses, plus the minimum.

Always have more margin than the minimum, so you can have a cushion to cover any losses. Otherwise, you are likely to see the trade get closed out as you lose down below the minimum.

Bob.