What the position is worth
Between opening a position and settling it, the market is re-quoted as events happen, and the account shows a number that changes with it. That number is not money yet. Understanding exactly what it measures is what stops a running profit being treated as a balance.
Three states of the same money
| State | What the number is calculated from | What you can do with it |
|---|---|---|
| Opening exposure | The money per point, multiplied across the range the market might run | Nothing. It is a measure of size, not of loss. |
| Unrealised P/L | The current pair's closing side minus your entry, times the money per point | Nothing directly. It changes equity and the margin cushion, and it can disappear in one re-quote. |
| Realised P/L | The actual close or the final make-up, once it is applied | It lands in the cash balance, subject to the firm's settlement process — see settlement. |
Why the mark uses the other side of the price
A buy is closed by selling, and a sell is closed by buying, so the mark has to use the side a closing trade would take rather than the middle of the pair. That is deliberately the worse of the two prices, and it is why an open position always shows a slightly worse figure than a reader's back-of-the-envelope calculation from the mid.
mid = (34 + 37) ÷ 2 = 35.5 → a naive calculation would show (35.5 − 29) × £2 = +£13
closing means selling at 34 → the mark is (34 − 29) × £2 = +£10
the difference, 1.5 points = £3, is the half of the spread that has not yet been paid
later, quoted 19–22 → the mark is (19 − 29) × £2 = −£20
and if the index settles at 29, the realised figure is (29 − 29) × £2 = £0
Notice the last two lines together. A position can be marked at a loss of £20 and still realise nothing, because settlement uses the make-up rather than the price that was on offer at the time. The mark is a snapshot of a market's opinion, not a bill.
What the account's equity figure contains
Most firms present the account as a small block of figures, and the relationships between them are worth knowing because they decide everything on the margin page.
| Line | What it is |
|---|---|
| Cash balance | Money deposited, plus realised profit, less realised loss, less any financing charge already taken. |
| Open position value | The sum of the unrealised marks of every open position on the closing side of each pair. |
| Equity | Cash balance plus open position value. This is the figure a margin requirement is measured against. |
| Margin requirement | The deposit the firm's model demands for the positions currently open — set per market, and covered in detail on margin, calls and stops. |
| Available funds | Equity less the margin requirement. What can be opened or taken out, subject to the firm's withdrawal rules. |
A rising open position value therefore increases available funds without putting any cash in the account, and a falling one reduces them without taking any out. That is the whole mechanism of a margin call, before any of the detail: a mark moving against a position eats into the deposit that is keeping the position open.
Three things a running profit is not
It is not a balance. An unrealised gain can be withdrawn only by closing the position that produces it, which changes the position. It is not a prediction. A market can be marked at a large profit for eighty-nine minutes and be worth nothing at the final make-up. It is not a reason to increase size. Adding to a position that is already showing a mark multiplies both the requirement and the distance to a margin call; the desk describes the mechanism and does not endorse the manoeuvre. Firms' own terms also typically allow positions to be closed and to restrict or refuse new ones, which is dealt with on the margin page.
The link below is a disclosed sponsored link and the only commercial element on this page. Nothing about an operator is being recommended, and a running profit on any market is not a claim this site makes or supports.
Open the partner accountWhere this sits in the desk
- What the index counts — the formula behind the number that is being marked.
- The spread and the financing — the two charges that reduce every mark.
- When the loss outruns the stake — what a mark in the wrong direction can reach.
- Settlement and the make-up — the moment a mark becomes money.