How Does MTM Affect the Cash Flow of a Futures Trader?
Marking-to-market results in daily cash settlements for futures traders. If the trader's position gains value, cash is immediately credited to their margin account.
Conversely, if the position loses value, cash is immediately debited from the account. This constant flow means traders must manage their liquidity to cover potential daily losses.
It prevents large, unpredictable cash flows only at expiration.
