GlossaryIntermediate
Mark-to-Market
Valuing a held position at its current market price, rather than at its original purchase price, to reflect its actual present-day worth.
Mark-to-market means valuing a held position at its current market price, rather than its original purchase price, so the reported value reflects the position's actual present-day worth, including any unrealized gain or loss (see Kaavon's "Unrealized Gain" glossary definition).
This is the standard valuation approach used throughout trading and risk management — a leveraged position's margin requirement and liquidation risk, for example, are generally calculated against its mark-to-market value, not its original entry price.
Examples
- A leveraged position's margin requirement and liquidation risk are generally calculated against its current mark-to-market value, not its original entry price.
- Mark-to-market valuation reflects a position's actual present-day worth, including any unrealized gain or loss since it was originally opened.