Initial Margin Requirement (IMR) refers to the minimum amount of collateral that a trader or investor is required to hold in their trading account when opening a position. This amount is determined by the broker or exchange and is calculated based on the size of the position, the volatility of the asset being traded, and other risk factors.
The purpose of the initial margin requirement is to protect the broker or exchange against potential losses in case the market moves against the trader’s position. If the trader’s losses exceed the amount of the initial margin, they will receive a margin call from the broker or exchange, requiring them to deposit additional funds into their account to cover the losses.