Mark-to-market means valuing a position at the current market price, not at the price you paid. If you bought and the market has risen, mark-to-market shows an unrealised (floating) profit; if it has fallen, a floating loss. Futures exchanges institutionalise this with daily settlement. CFD and spread-betting platforms show the same idea in your running profit and loss.
Daily settlement in futures
At the end of each session, many futures are marked to a settlement price. Gains are credited and losses debited from the margin account that day. That is why futures traders talk about variation margin: cash moves in and out as the market moves, even though you have not closed the trade. The notional contract size times the price change drives how large those daily cash swings are — contract size times the price change drives how large those daily cash swings are.
Mark-to-market keeps credit risk in check for the clearing house. It also means a winning trade can still force cash calls if you are under-margined on other positions, and a losing trade drains cash before you decide to exit.
Floating profit is not cash in your pocket
On a CFD platform, the green number beside an open trade is a mark-to-market estimate. It changes with every tick. It is not money you can safely spend until you close (and even then, spreads, commissions and financing may trim it). Treating floating profit as spendable cash is a classic path to oversized risk — a theme we return to later in today’s floor.
Account balance versus equity is the sibling concept: equity usually includes floating P&L, while cash balance may not. Knowing which number your margin use references matters when markets gap.
Where beginners get hurt
- Adding to losers because “it is only a mark-to-market loss”.
- Withdrawing or mentally spending floating gains that later vanish.
- Ignoring that wide spreads at the close can set an ugly mark.
- Confusing accounting mark-to-market in company reports with trading P&L (related idea, different rulebook).
Mark-to-market in company accounts (short contrast)
In accounting, mark-to-market or fair-value rules can force firms to revalue certain assets and liabilities each period. That is related in spirit — using current prices — but it is a reporting regime with its own standards, not your CFD ticket. Do not import accounting debates into a day-trading decision, or vice versa, without care.
For traders, the live lesson is simpler: the market revalues you continuously when you are leveraged. Your job is to decide when that revaluation should trigger action under pre-written rules.
Gaps and marks
If a market gaps through your level, the first mark after the open can jump. That is why weekend and event risk belong in the same conversation as mark-to-market literacy. Floating P&L is only as smooth as the underlying price path.
Intraday versus end-of-day marks
Some products show live marks; official futures settlement is an end-of-day convention that drives variation margin. A trade that looks fine at 3pm can still produce a cash call after settlement if the official mark differs from the last print you watched. Know which mark your broker uses for margin.
For CFDs, financing usually accrues on open notional regardless of floating profit. A green trade still pays to run. Floating profit does not cancel overnight costs.
Keep a one-line rule on your desk: valuation is continuous; realisation is a choice. Mark-to-market informs the choice; it does not make it for you.
Once that distinction is automatic, conversations about weekend gaps, floating profit and margin calls become much clearer — they are all mark-to-market problems in different clothes.
Bringing it together
Mark-to-market prices your open risk at today’s market. In futures it moves cash daily; on leveraged platforms it defines the equity you trade against. The discipline is to separate valuation from realisation: the market’s current opinion is useful; it is not a banked result until you close.
If you want to test how cleanly you separate floating P&L from risk decisions, take our free trader assessment.
