When a time−periodic magnetic field with a strong gradient is imposed tangentially at the interface of a ferromagnetic liquid, parametric surface instability may result. Under typical conditions this instability grows to a certain amplitude, where nonlinear dynamic effects become dominant, resulting in a standing−wave pattern. In the linearized small−amplitude limit, the surface dynamics are described by Hill’s equation. The nonlinear magnetization characteristic of the ferrofluid is successfully modeled by the Langevin superparamagnetic theory, using a single−sized particle approximation. The wavelength observed in the nonlinear amplitude limited state is successfully correlated with theory by determining the ’’most unstable wavelength’’, that is, the wavelength with the maximum growth rate for given conditions of applied magnetic field strength and frequency.