Mark-to-Market
The daily revaluation of open futures positions to the settlement price, with gains and losses settled in cash each session.
Mark-to-market (MTM) is the daily accounting process where all open futures positions are repriced to the day's settlement price, and the resulting gain or loss is immediately transferred between accounts through the clearinghouse.
A winning long position receives cash; a losing position has cash debited. This daily settlement eliminates the buildup of large uncollateralized exposures and is the mechanism that makes futures safe enough for exchange trading with relatively thin margins.
MTM also means that unrealized gains in futures are not truly "unrealized" — they flow to cash each day and are available to use as margin for new positions.
Example
Long 1 ES at 5,400. Day 1 closes at 5,415 → +$750 credited. Day 2 closes at 5,390 → −$1,250 debited. After two days the account is down $500 even though the trader holds the same position they entered.
Related Terms
Clearinghouse / Central Counterparty (CCP)
The entity that steps between buyer and seller in every cleared trade, becoming counterparty to both and guaranteeing performance so neither faces the other's default.
IntermediateDaily Settlement Price
The official closing price established by the exchange each session, used to calculate mark-to-market P&L and margin requirements.
IntermediateFutures Contract
A standardized, exchange-traded agreement to buy or sell an asset at a fixed price on a set future date, settled daily via mark-to-market.
BeginnerInitial Margin
The minimum deposit required to open one futures contract, set by the exchange clearing house (CME, CBOT, NYMEX).
BeginnerLiquidation
The forced closure of a futures position by the broker when account equity falls below margin requirements.
IntermediateLong Futures
Buying a futures contract — agreeing to take delivery (or cash settlement) at expiry, and profiting as the price rises.
BeginnerMaintenance Margin
The minimum equity level a futures account must maintain; falling below triggers a margin call demanding top-up to initial margin.
BeginnerSettlement Price
The official price used at expiration (or daily) to resolve all outstanding contracts — either cash-settled or as the delivery benchmark.
IntermediateShort Futures
Selling a futures contract — agreeing to deliver (or cash settle) at expiry, and profiting as the price falls.
BeginnerVariation Margin
The daily cash transfer that settles mark-to-market gains and losses on open futures positions, paid to the clearinghouse and credited to winners.
Intermediate