The broker says one MES contract needs a small intraday margin. The trader reads that as risk. Then the market moves twelve points, the stop is nowhere, and the account learns the difference.
Margin is access collateral. Risk is what the market can take before you are out.
Futures margin is the performance bond required to open or hold a position. It is not the maximum possible loss.
Trade risk comes from stop distance, tick value, contract count, slippage, and stop-fill quality.
| Concept | Meaning | Beginner mistake |
|---|---|---|
| Margin | Collateral required by broker/exchange. | Using it as max loss. |
| Trade risk | Dollar loss if stop is hit. | Calculating it after entry. |
| Liquidation risk | Broker closes positions when requirements are breached. | Assuming you choose the exit during stress. |
MES trade: broker intraday margin is low, but the setup needs a 12-point stop. One MES contract risks 12 x $5 = $60 before fees and slippage.
If the account risk budget is $50, the trade is too large even if margin allows it. Margin says yes. Risk says no.
Know the contract, tick value, stop distance, contract count, planned dollar risk, daily loss remaining, and event risk.
Source and risk notes
- CME education explains margin as a performance bond: Margin: Know What Is Needed.
- CME notes margin requirements can change with volatility: Understanding Margin Changes.
Final rule: margin opens the door. Risk decides whether you should walk through it.
