Contract size

Contract size specifies the standard quantity of the base currency in a single lot of a forex trade. For a standard lot, it is 100,000 units of the base currency. This value directly impacts the pip value, as each pip movement represents a specific monetary gain or loss. For example, on EUR/USD, a one-pip move on a standard lot equals $10.

Understanding contract size is crucial for retail traders as it dictates the risk exposure per trade. Larger contract sizes mean higher pip values, leading to greater potential profits or losses. Traders must select a contract size that aligns with their risk tolerance and account balance, often using micro (1,000 units) or mini (10,000 units) lots to manage capital effectively.