Margin
Every exchange requires the market participants to keep a certain amount of money in the account that controls the contracts this amount of money is known as margin it represents a bond that provides against losses from controlling the contract. Because margin is a bond you can think of it as a deposit meeting it is a requirement to control the contract and will be returned to you when you complete the transaction. When trading commodities, is a zero sum game meaning that at the end of every trading day all accounts are settled that day. All profits are deposited into your account and all losses are withdrawn from your account. When you close out a transaction with a profit your margin deposit plus to profit goes into trading account. If your account balance falls below the maintenance amount you receive a margin call, a call from your broker to deposit additional funds to maintain your position in the market. These margins are taken very seriously by brokers because the exchange collects the margin directly from each of the clearinghouses for which the brokers work.
Tags: commodity exchange, margin, margin commodity, margin requirments commodity