For futures contracts, the process of marking to market means that profits and losses are settled:

In the context of futures contracts, marking to market refers to the daily process of settling profits and losses. Every trading day, the accounts of holders of futures contracts are adjusted to reflect the current market value of the contracts they hold. This daily settlement ensures that gains and losses are realized every day, rather than being deferred until the contract's expiration.

This process helps to mitigate credit risk between trading parties, as profits are regularly credited to winning traders' accounts while losses are deducted from those who incur them. By managing the cash flows on a daily basis, the futures market can maintain greater stability and liquidity.

Unlike scenarios where settlements could occur weekly, monthly, or only at expiration, the daily adjustment mechanism is a crucial feature of futures trading that enhances market integrity and protects against counterparty risk.