Trade size
Family X · Account mechanics
Not to be confused with trade, cfd trade, swing trade.
Trade size is the quantity of an asset bought or sold in a single transaction. It is expressed in units, shares, contracts, or lots, depending on the market and instrument. Trade size determines the notional value of a position and, together with price movement, the profit or loss.
How trade size is expressed
Different markets use different units for trade size:
- Shares: the number of shares, such as 100 shares of a stock.
- Contracts: the number of derivative contracts, such as 5 futures contracts or 10 option contracts.
- Lots: in foreign exchange, a standard lot is typically 100,000 units of the base currency, though mini, micro, and nano lots also exist.
- Units: the number of cryptocurrency coins or tokens.
Trade size is distinct from position size, which can be built from multiple trades.
Worked example: calculating notional value
Trade size multiplied by price gives the notional value of the transaction.
Trade size and risk
Trade size directly affects the monetary risk of a position. A larger trade size increases both potential profit and potential loss for a given price move. Traders often adjust trade size according to account equity, volatility, and stop-loss distance. In margin trading, trade size also determines the margin required, which varies by broker and instrument.
Often confused with
- trade
- A trade is the completed transaction itself, while trade size is the quantity involved; the visible sign is that a trade has a timestamp and price, whereas trade size is a number of units.
- cfd trade
- A CFD trade is a transaction in a contract for difference, whereas trade size is the quantity of any asset traded; the visible sign is that a CFD trade references a derivative contract, not a physical or spot asset.
- swing trade
- A swing trade is a strategy held over days or weeks, while trade size is the quantity in a single transaction; the visible sign is that a swing trade is defined by its holding period, not its quantity.