Mark-to-Market

Mark-to-market is another term for closing the books at a certain time. When a Mark-to-market is performed on a monthly basis, it means the account is officially closed at the end of each month. Without a Mark-to-market, it would be impossible to know where profit or losses are to be allocated.

For example, a trade that begins November 1 and closes January 15 makes 30%. The Mark-to-market allocates the proper percentages to each month as opposed to the entire amount at the end of the period.