How Does Daily Settlement Affect the Cash Flow for Futures Traders?
Daily settlement means that profits are immediately credited to the trader's margin account, and losses are immediately debited. This creates daily cash flow fluctuations.
A profitable position provides cash that can be withdrawn or used as margin for new trades, while a losing position requires cash to be deposited to meet margin calls. This reduces the credit risk of the position.
Glossar
Daily Settlement Impact
Settlement ⎊ Daily settlement impact refers to the financial consequences of marking derivatives positions to market at the end of each trading day.
Daily Cash Flow
Projection ⎊ Daily cash flow within cryptocurrency, options, and derivatives contexts represents the net inflow and outflow of funds resulting from trading activities, collateral adjustments, and settlement processes on a given day.
Daily Settlement
Settlement ⎊ Daily settlement in cryptocurrency derivatives represents the procedural culmination of trading activity, typically occurring at a predetermined frequency ⎊ often end-of-day ⎊ where net obligations are calculated and fulfilled.
Cash Flow
Valuation ⎊ Cash flow, within cryptocurrency, options, and derivatives, represents the net amount of liquidity generated and expended over a defined period, critically influencing asset pricing and risk assessment.