Contract size
Contract size: Contract size is the number of units of the base currency in one lot. For a standard forex lot it is commonly 100,000 units.
How contract size works
Brokers list the contract size of each instrument in its contract specifications. The size of a position in units is the number of lots multiplied by the contract size, so with a 100,000-unit contract, 1 lot is 100,000 units, 0.10 lots is 10,000 units and 0.01 lots is 1,000 units.
Why it matters
Contract size links the lot number you type into the platform to the real size of the position — and therefore to its pip value and margin. It is not the same for every instrument: CFDs on gold, indices or commodities use their own contract sizes (many brokers define one lot of gold as 100 troy ounces, for example, but this varies). Checking the specification before trading an unfamiliar instrument avoids opening a far larger position than intended.
Example
With a contract size of 100,000, trading 0.25 lots of GBP/USD means a position of £25,000.
Learn more
- What Is a Lot in Forex? Standard, Mini and Micro Lots
A lot is the unit of trade size in forex. Learn standard, mini, micro and nano lot sizes, their pip values and how to calculate lot size.