How much one lot will represent:the contract size says what is meant.
The quantity of the underlying represented by one lot of an instrument.
In foreign exchange one standard lot is 100,000 units of the base currency; for gold it is commonly 100 troy ounces.
In plain words
Contract size is the amount of the underlying that one lot stands for. In foreign exchange one standard lot is 100,000 units of the base currency; for gold it is commonly 100 troy ounces. The lot figure on a platform means nothing until it is multiplied by the contract size.
See it move
Stage 2 of 3: Contract size
Why it matters
Contract size turns a lot figure into real exposure, and with it the value of each step in the price. The same “1 lot” is a very different position in a currency pair, in gold and in an index.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A trader opens 0.20 lots of EUR/USD at an invented price of 1.1000.
- 1Units = 0.20 × 100,000 = 20,000 euros
- 2Notional value = 20,000 × 1.1000 = 22,000 US dollars
- 3Pip value = 0.0001 × 20,000 = 2 US dollars
A position of 0.20 lots is 20,000 euros, and each pip is worth 2 US dollars.
A common mistake
It is easy to assume that one lot is the same size in every instrument. Contract size is set for each instrument and can differ between brokers; it is stated in the instrument’s specification.
Check yourself
Educational information, not investment advice or a recommendation to trade.