What are margin and leverage?
Margin is the equivalent of a ‘good faith’ deposit. It’s a small percentage, usually between 2% and 10%, of the value of the contract that is deposited with a broker. Margin deposits are set by the exchange and are subject to change with price movement and market volatility. Leverage is the ability to use a small amount of money to make an investment of greater value so that small price changes can result in huge profits or losses. Source: Mastering Commodity Futures & Options.
