Keeping futures position ongoing

[osho67]

When you open a futures contract and keep it ongoing for few days or weeks, I am not sure what happens at the end of the day. It seems the position is closed and a new one is opened at the closing price. Is this closing price average of bid and ask? If so does it mean that you have paid half of spread every day for running position on and on ?This might prove expensive if you keep the position open for the full quarter till expiration.

Please explain. Help much appreciated. Thanks

 

[ERA]

osho67,

you may be confusing futures with spot forex,

A futures position is not closed at the end of the day and a new one assigned the follow. The price you entered the position will always be the same.

At the end of the day the position is marked-to-market using the settlement price at the end of the day.
This is just a process of 'squaring the books', and your account is credited or debited with the days price move. The actual price the trade was entered at never changes unlike spot forex roll overs.

hope that helps a bit.

 

[1lotwonder]

hes probably talking about accounts being marked to market.

this means that your account is debited or credited with the difference between the settle and the price the position was initiated or the previous settlement each night.

 

[osho67]

Thanks, I agree this may be just book-keeping entries. I got confused because IB was showing my profit/loss today based on new price which was yesterdays closing .