Initial margin

A reservation against an account, not a fee and not a cost. Opening a position moves an amount from the part of the balance that is free into the part reported as used, and closing the position releases it. Nothing has been paid to anybody. The figure is also not the largest amount a position can lose: profit and loss are calculated on the full contract value, so losses are not limited to the amount deposited, and a position can move further against an account than the sum reserved for it.

It is calculated as the contract's full value multiplied by the margin requirement percentage for that instrument, converted into the account currency where the instrument is quoted in another. The percentage is set per instrument class and is not fixed for all time: a provider or a regulator can raise it, and requirements are commonly raised ahead of a scheduled event or a long weekend, in which case the higher figure applies to positions already open as well as to new ones. Requirements differ between instruments for the same reason: a requirement is a judgement about how far a price can move before a position can be closed.

The confusion worth clearing is between the several margin figures on one screen. Initial margin is what a position needs at the moment it opens. Used margin is the total reserved across every open position, free margin is equity less used margin, and margin level is equity as a percentage of used margin, which is the figure a close-out rule is written against. Only the last of the four changes as the market moves, because the first three are set by position size and the requirement rather than by price.