What do you know about Contract size?
Learn that all goods and services are sold and bought on a fixed-unit basis.
We buy meat and the unit of sale is the kilogram.
We buy gold and the unit of sale is the gram.
It is rare to buy a commodity or service without a unit sold because it makes the calculation somewhat complex and unusual.
The currencies are sold and bought on the basis of fixed units also called lot lot.
They are the least traded in the currency market.
Lot: is the lowest limit can be traded in the currency market and can not be traded only by the multiples.
Any you can buy lotte of euro or 2 lot or 3 lot or 20 lot … etc
But you can not buy a lot and a half or a lot and a quarter, but only multiples of the lot.
But how much is the lot worth of the euro or any other currency?
This varies depending on the brokerage company that will deal with it.
The value that the lot is equal to a currency is called contract size.
Although the size of the lot varies from one company to another, the size of the lot in most brokerage companies currently is 100,000 units of the base currency.
What does that mean?
This means that when you ask for the purchase of Lot Euro you will buy 100,000 Euros and will pay for it in US dollars at the price at that time, because the euro is the base currency against the dollar.
When you ask for the purchase of a lot of pounds will be purchased for 100.000 pounds and will be paid – sold – against the US dollar by the price at that time.
When you ask for a lot to buy, Yen will be bought for $ 100,000 because the dollar is the base currency against the yen. When you ask for a lot to sell, you will sell the equivalent of $ 100,000 from the yen.
As for the Swiss franc, when you ask for the purchase of a lot of francs, a franc will be bought for the equivalent of $ 100,000 and the equivalent of $ 100,000 will be sold out of the franc if the franc is sold as the dollar is the base currency against the Swiss franc.
In any case if you find it difficult to understand what we explained, do not worry .. !!