What is Mark-to-Market?

Definition of Mark-to-Market: This is also known as fair value accounting. It can be explained as an accounting procedure for re calculating the book price or earlier market cost of all the positions by utilizing the market costs at a single point of time. Generally, the book values depending on the real cost of the monetary instrument, currency, commodity can become out-of –date and wrong as a correct measure of cost. In high amount of trade surroundings, regulators need that the brokers and banks perform a continuous assessment of danger by utilizing the existing market costs. Forex traders who expand the leverage must mark the market to calculate and mitigate their exceptional danger on a constant basis. Characteristically, the adjustments are executed at the conclusion of trading. If the account cost after the adjustment becomes low under the level of margin, a margin to market call will take place. The trader will have to deposit large amount of money, distribute large numbers of collateral or liquidate the open positions to give back a satisfactory level.