Flat position

Flat is the absence of a position rather than a kind of position. Nothing is marked to market, no margin is set aside, and the unrealised figure for that instrument is nil. Everything already closed remains where it was recorded: results realised earlier sit in the balance and are unaffected by the account being flat now.

How an account becomes flat depends on the accounting model it runs. Under netting, opposite contracts in the same instrument offset one another, so a purchase and a matching sale leave no position at all and the result is realised at that moment. Under hedging accounting, opposing positions can both remain open, each with its own collateral and its own financing, and the account is then flat in net exposure while still holding two live positions. That distinction is the single thing that most often confuses readers, because net flat and no open positions are not the same state and the two models report them differently.

The word also does duty as a verb in market usage, where going flat means closing everything in an instrument or across a book. Standing flat over a weekend, across a scheduled announcement or outside a chosen session is a convention practised on some desks and not on others; it is a decision about carrying exposure through a period of thin liquidity, and it is described here as a practice rather than as a rule that produces a particular result.