Margin and leverage

Trader's Glossary · Contracts and markets

Definition. Margin is the amount the broker sets aside in your account to allow you to open a futures position. Leverage is the ratio of the contract's value to that amount.

How it works

The value of an MYM contract is the index price multiplied by $0.50. With the index at about 52,000 points, that's about $26,000. The margin is many times smaller, which is why profits and losses are calculated on the full contract value.

Example

A 100-point move in the index changes the value of one MYM contract by $50, regardless of the margin.

What to watch out for

Leverage works both ways. Margin is set by the exchange and the broker and can change, especially in periods of high volatility. Always check the details with your broker.

See also

Futures contract, MYM, Drawdown.

More in Hetman Capital Club

You'll find the full explanation with graphics, examples and exercises in the 🖥️ Order flow atlas space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).

Educational content, not investment advice.