A futures contract can create a large exposure with a small deposit. Imagine one contract entered at one hundred points, worth ten dollars for each point of price movement. If the futures price rises to one hundred and six, the long gains sixty dollars. The short loses sixty. The contract multiplier converts a price change into money.

Futures margin is collateral supporting your obligations. It is not a down payment that buys the underlying asset. In our example, start with two hundred dollars of margin. A move from one hundred to one hundred and four credits forty dollars. A later move to one hundred and one debits thirty. Net profit is still ten dollars.

The path matters even if your eventual forecast is right. Give this example a maintenance threshold of one hundred and fifty dollars. A fall to ninety four leaves one hundred and forty. You may need more collateral or have the position closed. These are invented teaching numbers, not exchange requirements. A later rebound cannot rescue a position already closed.

Derivatives can also reduce exposure. Match one unit of an asset with a short future entered at one hundred. As the asset rises, the short loses; as it falls, the short gains. In an ideal matched settlement, the combined value stays at one hundred. Real hedges face basis risk, costs and collateral demands. Perpetual contracts instead have funding payments and no scheduled expiry.