Daily Settlement (BM&FBOVESPA B3 FUTURES)

Dec 2, 2021

This script is simple designed to plot the daily settlement to any Securities traded on B3, Brazilian stock exchange.

The daily settlement is an important price where position traders are adjusted every day. This adjustment is defined by the exchange itself every day at approximately 4 pm, with an average of all trades in this window.

We consider that the settlement is a region of "money spent", where every day, some player "woke up" in long or in short at that price. As this is a region of "money spent", traders should give significant attention when traded at this price.

6 days ago

Release Notes

The daily settlement of futures contracts, such as NASDAQ-100 (NQ), is crucial for ensuring market transparency, financial stability, and security. It serves as a risk mitigation mechanism for all participants. Here are the key reasons why it is important:

🔹 Reducing Credit Risk
Daily settlement prevents the accumulation of large losses over time. Since positions are marked to market daily, any profits or losses are settled on the same day, reducing the risk of default at contract expiration.

🔹 Ensuring Liquidity and Solvency
Traders who incur losses must deposit additional margin if their account balance falls below the minimum required by the broker or exchange. This prevents highly leveraged traders from defaulting.

🔹 Preventing a "Snowball Effect"
Without daily settlement, losses could accumulate until contract expiration, increasing systemic risk. The settlement process forces traders to keep their exposure under control.

🔹 Easier Position Closing
With daily settlements, traders can exit positions before expiration without unexpected financial impacts, as profits and losses have already been accounted for up to that point.

🔹 Creating a Fairer Market
By adjusting positions daily, futures contracts ensure that all participants trade under the same rules, reducing manipulation and fostering a more transparent market environment.

In summary, daily settlement protects both individual investors and financial institutions, preventing hidden risks from building up over time. For those trading NASDAQ-100 (NQ) futures, understanding this mechanism is essential for risk management and efficient trading. 🚀

5 days ago

Release Notes

Small fix on close parameter. The previous behavior affect the indicator display.