MTM

MTM (mark to market) is the practice of revaluing an open position at the current market price, so its profit or loss is measured continuously rather than only when the trade is closed. The “MTM” figure on a trading terminal is the running P&L of your open positions — what you would make or lose if everything were squared off right now.

In Indian F&O, MTM is more than a display number. Futures positions are settled mark-to-market daily: at each day’s close, the difference between the position’s previous reference price and the day’s settlement price is actually debited or credited to your account in cash. Losses leave your account the same evening, even though the position is still open.

Example

You buy one lot of NIFTY futures (75 units) at 25,000 on Monday. The daily settlement price closes at 24,940. MTM loss = 60 points × 75 = ₹4,500, debited that day. On Tuesday the contract settles at 25,020: MTM credit = 80 × 75 = ₹6,000. Your net is +₹1,500 over two days — the same as (25,020 − 25,000) × 75 — but the cash moved daily, and Monday’s debit had to be funded. Hypothetical figures.

Why it matters

Daily MTM is why funding a futures position takes more than the initial margin: an adverse streak drains cash day by day and can trigger margin calls or forced square-offs long before your thesis plays out. Systematic traders model MTM swings when sizing positions, keeping a buffer above exchange margins so a normal drawdown never becomes a forced exit.

In INDfolio AI, paper trading tracks live MTM on simulated positions so you see this cash rhythm before trading real capital — see Paper trading.