ForecastingStocks

Two mechanics define the day-to-day life of a futures position: rolling and margin.

Rolling

Because every contract expires, an investor who wants continuous exposure must roll: close the expiring contract and open the next one before expiry. Rolling is not free — its cost or benefit is the roll yield set by the curve shape (contango costs you, backwardation pays you, from the previous lesson). Funds that hold commodities roll constantly, and how cleverly they roll is a real differentiator between products.

Margin

Futures are leveraged. You do not pay the full notional value; you post a good-faith deposit called margin.

Initial margin — the deposit required to open the position, often only 5–15% of the contract's notional value.
Maintenance margin — the minimum equity you must keep. Fall below it and you get a margin call to top up, or the broker closes your position.

Mark-to-market

Futures are settled daily: at each session's close, gains are credited and losses are debited from your account in cash. You feel the move every day, not just at exit. This daily settlement is why a sharp adverse move can trigger a margin call quickly.

The leverage warning

That small margin means large leverage — a few percent move in the commodity can be a large percentage swing on your deposit, in both directions. Crude's negative-price day wiped out accounts that were over-leveraged. As in every market we teach: size your position to the risk you can absorb, set protective stops, and never confuse the small margin with the small risk.