Futures margin is not a cost

Almost every retail explanation of futures gets this wrong, so this lesson will be pedantic on purpose: margin is not a cost. Nothing is charged. Nothing is spent. Nothing needs earning back.

What margin actually is

The clearing house stands behind every trade, so it holds a deposit from both sides - sized so that a bad day's move cannot leave either unable to pay. Post an illustrative 5% on one $80,000 crude contract and $4,000 moves from your cash to your margin account. Your money, still. When the position closes, it comes back, adjusted only by the position's own profit or loss. A parking deposit, not a parking fee.

Where the muddle comes from

Margin gets called a cost because it arrives entangled with leverage, and leverage does have consequences. Posting $4,000 to control $80,000 means a 5% move in the commodity is a 100% move against the deposit - but that is the arithmetic of exposure, priced in module 1, not a charge anyone levied. And tying up $4,000 has an opportunity cost - but so does every use of capital, and futures margin can often be posted in interest-bearing form, which makes it one of the cheaper places idle collateral sits.

The clean ledger

• Margin: a returnable deposit. Not in the cost column, ever.
• CFD financing: interest on borrowed notional. A real cost, in the column, nightly - last lesson's subject.
• The exposure itself: not a cost either, but the thing that can actually lose money, and the reason the deposit exists.

Keep the three lines separate and wrapper comparisons finally read honestly: futures tie up more capital and charge nothing to hold; CFDs tie up less and run a nightly meter. Which trade-off wins depends on the holding period - and that question already has a module 3 lesson of its own.