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All buyers and sellers of futures contracts have to post margin money through their brokers to act as a performance bond. This margin money financially secures their position and protects the party on the opposite side of the transaction from default. Generally, the margin requirement for a futures contract is established at a level close to the maximum amount that any short or long trader could lose in any one-day trading period because each day the account is “marked-to-the-market” and the daily gain or loss is reflected in the account balance at the end of the day. The maximum amount of loss is determined by the daily price limit. For example, the daily price limit on the Chicago Mercantile Exchange (CME) Group Live Cattle futures contract is $3.00/cwt. So, for the 400 cwt. contract, the largest increase in contract value in a one-day period would be $1,200 (which would be a loss for the short trader), and the largest daily decrease in contract would be $1,200 (which would be a loss for the long trader). The margin requirement is also established according to the volatility of the futures contract price. The more volatile prices are, the more likely the daily price limit will be reached, and thus the margin requirement increases.