Forex glossary
Position size (lot quantity)
Documentation context: Lots convert to units through contract size; minimum volume, volume step and tick value are symbol parameters.
Position size is the number of instrument units or contracts, often entered as lots on a platform. Together with contract size it determines exposure and sensitivity to price changes. Planning against a loss budget also requires exit distance, costs and volume constraints.
Illustrative example
How does it work in practice?
In a hypothetical linear model, a price increase of 2 USD per unit produces a 200 USD price gain on 100 units. On 200 units, the same increase produces 400 USD before costs.
Contract units, notional and leverage
EUR/USD model: one lot is 100,000 EUR; the rate is 1.10 USD per EUR. For a 0.20-lot position, assume equity of 5,500 USD and margin at 5% of notional.
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| Term | What it describes | Shared example |
|---|---|---|
| Lot (position unit) | A contract unit, not the account currency. | This specification defines one lot as 100,000 EUR. |
| mini lot (0.1 lot) | One tenth of a standard lot. | 0.10 lots represents 10,000 EUR. |
| Micro lot (0.01 lot) | One hundredth of a standard lot. | 0.01 lots represents 1,000 EUR. |
| Position size (lot quantity) | The lot count or unit quantity selected for a position. | 0.20 lots × 100,000 = 20,000 EUR. |
| Position notional (notional value) | Exposure stated in a currency, distinct from margin. | 20,000 EUR × 1.10 = 22,000 USD; 5% margin is 1,100 USD. |
| Leverage | Actual exposure relative to equity, distinct from notional relative to margin. | 22,000 / 5,500 = 4:1 effective leverage; 22,000 / 1,100 = 20:1 relative to margin. |
Takeaway: Convert lot count through contract size into notional first. State the denominator before calculating a leverage ratio.
Change an assumption, see the result
What changes if…?
Change the position’s USD notional at a fixed percentage move. Compare P/L and effective leverage; position size alone does not guarantee a maximum loss.
Linear USD exposure model: margin = notional ÷ offered leverage; effective leverage = notional ÷ equity. Hypothetical fixed margin rate, no costs or currency conversions. The value 30 is not a global limit or recommendation.
Check your understanding
Calculate model volume from a budget, exit distance and pip value.
Show the answer and explanation
0.40 lots
The budget is 10,000 × 1% = 100 USD. 100 / (25 × 10) = 0.40 lots, matching the increment; actual loss is not guaranteed.
From exposure to a risk plan
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Related terms
Sources and documentation
- MetaTrader 5: Market Watch
Symbol specifications define contract size, volume constraints, margin calculation, execution rules and the commission charging model.
Document read: - CME Group: Proper Position Size
The lesson links planned position size to the risk budget, stop distance and the contract's monetary value per price increment.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.