The market prices of futures contract will change throughout the time between the date of someone buying or selling a future contract and the delivery date or the date on which the contract is closed out. There is a possibility that the price will move against the person/company buying or selling the contract resulting in a loss. In some case the person/company may not be able to pay the loss thereby defaulting on the contract. The idea of the margin is to minimize the possibility of defaults occurring n contracts. The margin system requires the person/company wishing to buy or sell a contract to deposit a specific amount of cash, referred to as an initial margin or deposit margin. The profit or loss on the position held by the person/company is calculated at the end of each trading day and transferred to or from the margin account. This adjustment to the margin account results in variation margin being received from or paid to the clearing house.Futures enable users to take a position in a financial instrument without having to incur the full cost of that instrument. The only cost is the initial margin which is usually between 1% and 5% of the value of the underlying instrument. This has the effect of gearing up and returns on the transaction; enlarging gain if the market moves in the users’ favour and enlarging losess if the market moves against the user.