Margin zones are chart levels built from CME exchange margin requirements. Margin is the amount a participant keeps on account for one futures contract. When price moves against a position by a distance comparable to that amount, the participant has to add funds or close. That is why price often slows, reverses or, on the contrary, accelerates at zone boundaries.
How margin zones are built
The idea is to convert the exchange margin into a price distance and project it from a significant high or low. The result is a scale in percent of margin:
- 25%: the near reaction zone, a frequent place for shallow pullbacks;
- 50%: a typical pullback zone within a move;
- 75%: an intermediate zone before the key one;
- 100%: the key zone: the move has consumed the margin in full, and mass position closing is possible here;
- 150% and 200%: far zones reached by strong impulses and trending moves.
We do not publish the exact conversion method. What matters is that the zones are tied not to the shape of the chart but to real money the exchange requires per position. CME changes margin itself, usually raising it when a market gets more volatile. OLIMP receives current values automatically every day and keeps the history: a projection from an old extreme is built with the margin in effect on that date.
Building a projection in OLIMP
Zones do not appear on their own; you build them from a chosen extreme. The settings are on the "MZ" tab.
- Turn on "Draw margin zones (manual)" and tick the percentages you need.
- Hold Ctrl: circles appear on chart extremes, green on highs and red on lows.
- Ctrl + click a red circle for a projection upward from the low; a green one for a projection downward from the high.
- The base circle can be dragged, and the right edge of the zones can be pulled to change their length.
"with text" and "with prices" add the percentage and price to each zone. "Clear stretches" removes everything you built.
Which extreme to build from
- The start of the move: the low a rally began from or the high a decline began from. The zones show how much margin the move has already consumed for those positioned against it.
- A weekly or monthly extreme for references on a longer horizon.
- A session extreme for intraday work. Session highlighting is on the "Other" tab.
Choosing the extreme is the only subjective step. The more obvious the extreme is to the whole market, the more participants measure their losses from it.
Bank levels
The "Other" tab has a "Bank levels" tool: weekly boundaries the indicator builds automatically, one resistance line and one support line. You can additionally enable history for past weeks (the "weeks" field, 4 by default, 12 at most) to see how price reacted to these levels before.
Reading zones together with option levels
Margin zones and option levels come from different data: the former from futures margin requirements, the latter from open option positions. When independent calculations point to the same place, it deserves more attention.
- The 100% zone coincides with a wall: an area where some have to close while others want to hold price.
- The 50% zone coincides with the edge of the daily range or a daily pivot: a reference for intraday work.
- Price passed 100% and left the ±2σ corridor: the move is stronger than the options market priced in.
Even a perfect overlap is a zone of interest, not an instruction to act: a decision is confirmed by price behavior.
Using zones through the week
- At the start of the week, build a projection from last week's extreme that the current move started from. Keep the 50% and 100% zones.
- Turn on "Bank levels" for automatic weekly boundaries. A bank level that coincides with another of your levels (a wall, Max Pain, a ±1σ border) is the first candidate for attention.
- Once price has passed the 100% zone and held beyond it, enable 150% and 200% as continuation references.
- When a new significant extreme forms, build a second projection from it in the opposite direction. You can keep the old one: zones from two projections landing in the same place deserve separate attention.
Intraday, the same approach works from a session extreme with the 25% and 50% zones. Check it against the "Daily range" on the "Volat." sub-tab, which shows the move the options market prices for a session. If the 50% zone lies outside the daily range, reaching it today will be harder than usual.
What margin zones do not show
- Actual positions. A zone tells you at what distance from the extreme the margin would be exhausted if a position had been opened at that extreme. Where positions were really opened it does not know.
- A participant's actual cushion. Exchange margin is the minimum requirement. Many keep more on account and are not forced out at 100%.
- Direction. A zone is a place of possible reaction. It does not say which way price goes afterwards.
Frequently asked
Are margin zones in the free version? Yes, they work without a key.
Do I need a separate margin-zone indicator? No, the zones are built into OLIMP on the "MZ" tab. You can download the indicator for free.
Does it work on forex? Yes. Margin is taken from CME currency futures, and the zones are drawn on your broker's chart of the pair. On inverse pairs (USDJPY, USDCHF, USDCAD) prices are converted automatically.
Why is a zone wider than last week? The exchange changed its margin requirements. Projections from old extremes do not change: they use the margin of their own date.
This article is not investment advice.