4 Things to Know About Mark to Market

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Published 24 Apr 2026

Margin trading allows you to trade over and above your account balance. This allows you to trade high-value stocks worth 10-15 times the money in your account. Therefore, when you trade on margins, you take a loan to trade. In Mark to market trading, you record the value of the security to reflect its current market value. Therefore, it is the current market worth of the underlying asset. Click here to read more about mark to market in margin trading.

Here are 4 things you need to know about mark to market:

Accounting Tool

Mark to market (MTM) is an accounting tool that records the prices of assets with respect to its current market value. The value of the stocks in your demat account changes on a real-time basis. When the trading hours end, the price assigned to each stock is the one decided by trade (buying and selling). Therefore, it is the precise determination of the current value of your portfolio.

Realistic Estimate Of The Portfolio

If you own 10 shares of XYX company purchased for Rs.40 per share. Consider that the stock is trading now at Rs.60. The mark-to-market value of the shares is equal to (10 shares x Rs.60), or Rs.600, whereas the book value might only equal Rs.400. Similarly, if the stock decreases to Rs.30, the mark-to-market value is Rs.300. You have an unrealized loss of Rs.100 on your original investment.

Applies To Both, Stocks And Bonds

Mark to market also applies to bond markets. A bond is just like a loan, taken by the company, for day-to-day working, development, and expansion of their business. Like any loan, bonds have an interest rate. The bond issuing company has to pay interest to the lenders (bondholders). Therefore, when the interest rate goes up, the bond must be marked down. This is because the lower coupon rate will lead to a reduction in bond prices.

Applies To Mutual Funds

In case of mutual funds, mark to market is done on a daily basis, during market closing. This can provide you an idea about a company’s Net Asset Value (NAV). However, this practice is easy in equity-based funds, rather than fixed income instruments.

Mutual Fund Investment: Liquid fund yields set to come off Read more

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Watch and Learn

If you trade in the stock market, you’ve probably heard the term MTM (Mark to Market). But what does it actually mean? And why does your profit or loss change daily — even when you haven’t sold your position? In this video, we simplify the concept of Mark to Market and explain how open positions are revalued at the end of each trading day. Understanding MTM is essential for traders dealing in derivatives, futures, and leveraged positions, as it directly impacts your daily profit and loss calculation.

What Is MTM? | Mark to Market Explained Simply in Trading

Kotak Neo

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1m 38s

This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Neo Research Team, nor is it a report published by the Kotak Neo Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262.

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