Forex trading is one of the most highly profitable businesses available in market. Once decisions are taken properly and with accurate measures, no one can restrict the traders to earn profit and to sustain in this business. Traders in this business must have basic skills and knowledge about the movement of market, different tools, and criterions in order to be successful in the forex trading. In this context, forex contract size is also one of the most crucial components for successful trading experience in forex.
What is Forex Contract?
It is said that forex contact is actually the result of concurrent purchase of any one specific currency along with sale of other. It can be simplified as a process of buying and selling money at the same time.
What is the value of forex market contract size?
Each and every standard lot traded in the forex market is equivalent to 100,000. It can be simplified as- When a trader is trading one lot in a standard account, it means that trader is placing $100,000 US dollars in the forex market.
It is also evident that without leverage, most of the investors would not be able to afford such a transaction. Therefore leverage of 1:100 would allow a trader to place the same lot, i.e., of $100,000 trade through posting $1,000 in margin.
More about forex contract size
Contract size is actually deliverable quantity of financial instruments or commodities underlying futures and options contracts those can be traded in exchange. The size of contracts is also identical for optional contract and future contracts, and it also varies depending on the instrument which is traded. Along with all these, forex market contract size is also used to analyze the value of dollar.
Variation in forex contract size
It is true that contract size for most of the equity option contracts is 100 shares. But the size of contract for financial instruments and commodities like interest rate futures and currencies generally varies widely.
For an instance, the contract size of gold futures contract is 100 ounces (on COMEX), so move of $1 in the price of gold translates into $100 change in the value of gold futures contract.
There are many brokers available online and physically that also offer micro lot or micro contract in which one micro lot is equivalent to 1/10th of forex contract, and it is then valued at $1000 USD.
Why do you think that FOREX market is the best choice to trade in with different forex market contract size?
There are number of facts available in answer to the question being asked just above. The reasons justifying the facts are mentioned below:
- The best thing is that the traders can always earn profit, whether the market is down or up.
- In this forex, market research is completely not required.
- This market also has potential for cash flow on regular basis.
- The traders can also get liquidity, maximum leverage and volatility for optimum profit potential.
- Last but not the least, there is no uptick rule.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.