Contract size across the asset classes

The same number in five tickets 

Every order ticket has a volume field and it takes a number. That number is not a quantity of anything on its own. When the ticket is submitted, the platform reads the symbol first, looks up the contract size recorded against that symbol, and multiplies the two together. Volume is a multiplier. Contract size is what it multiplies, and it is the half of the calculation the ticket does not print.

So the same figure typed into five tickets opens five different amounts of five different things, and the gap between them is not small. It is not a quirk of one provider or one platform either. It follows from the underlying markets not being made of the same material: a currency pair is counted in units of currency, gold in troy ounces, crude oil in barrels, a shares CFD in shares, an ETF CFD in fund units, and a stock index is not counted in anything at all, because there is no physical thing there to count. The instruments YAL lists across the five classes are set out on the markets pages.

Four classes count units. One prices a point. 

In foreign exchange, in commodities and metals, in shares CFDs and in ETF CFDs the contract states a number of units, and the units are real things with prices of their own: units of the base currency, troy ounces or barrels, shares in a listed company, units in a fund. Exposure follows from one multiplication. Contract size times the number of lots gives the quantity the position covers, and that quantity times the current price gives the money value of the position in the currency the instrument is quoted in.

An index CFD cannot be built that way, because an index is a number rather than a thing. There is no quantity of it to hold. The contract therefore states the multiplier directly, as an amount of money for every full point the index moves, and the money value of the position is the index level times that amount times the number of lots. The practical consequence when reading a specification is that the word size is doing two different jobs across the five classes. In four of them it counts units of the underlying. In the fifth it prices a point.

Tick size, tick value, and how they connect 

A tick is the smallest amount by which a quoted price is permitted to change. It is set by the quoting precision of the instrument, so it is a property of the symbol rather than a choice anyone makes. Tick size states that amount in price terms. Tick value states the same amount in money: what one tick is worth on one contract, calculated as tick size multiplied by contract size, and then converted into the account currency where the account currency and the quote currency differ.

Nothing in that block is an independent fact. Tick value is derived from two numbers stated further up the same specification, which is why a tick value that seems to contradict the contract size is usually a misread of the units rather than a second, conflicting figure. The derivation also explains the asymmetry a reader meets between one class and another. At the same tick size, an instrument whose contract covers a hundred units produces a hundred times the money per tick, per lot, of an instrument whose contract covers one. The tick looks identical on the chart. The money it represents is not.

What a contract specification states 

A contract specification is the record of what one contract in a given instrument actually is. It is published per instrument rather than per class, because no rule covers a class once the first exception appears in it, and the fields that matter for sizing are always the same ones:

• The contract size, and the unit it is counted in.
• The quoted precision, and the tick size that follows from it.
• The tick value, stated per contract in the quote currency.
• The minimum volume the instrument accepts, and the step between one permitted volume and the next.
• The currency the instrument is quoted in, which is the currency profit and loss arises in before any conversion.
• The schedule the instrument trades on, and an expiry date where the contract carries one.

The specification is read from the platform rather than from memory. The platforms YAL runs, MetaTrader 5, both expose a specification window for every symbol, and the fields above are read straight out of it. A figure carried across from a different instrument, or from a general rule about the class, is the most common way a position ends up a different size from the one intended.

Two of those fields decide how finely exposure can be adjusted. The minimum volume is the smallest position the instrument accepts, and the volume step is the increment between one permitted size and the next, which is why fractional lots exist at all: they are the mechanism by which a contract designed around a large unit can be held in a smaller amount. Both are set per instrument and neither is universal, so the smallest position available in one market is not evidence of the smallest position available in another.

Exposure is the comparable number, not the lot count 

Because contract size varies by instrument, a lot count compares nothing. Two positions of the same volume in two classes are not the same size in any sense that survives contact with the arithmetic, and a habit formed in one market carries no information into another. The number that does compare is exposure: the money value of what the contract covers, quantity times price, expressed in one currency. It is the number every later calculation is built on, and it is the only one that means the same thing in all five classes.

The three lines carry the whole point of the lesson. One number was typed into the volume field in every case, and the exposure behind it ranges over a factor of forty. Since the money a price move produces is calculated on that exposure, a larger contract size produces a proportionally larger debit when the price moves against the position, and a proportionally larger credit when it moves in favour, to exactly the same degree in both directions. The calculation runs on the full value of the contract rather than on the money posted against it, so a loss is not limited to the amount deposited.

Where practitioners disagree 

Exposure being the comparable number does not settle what it should be compared against, and here the traditions split. One holds that equal exposure across instruments is the honest normaliser, since it makes two positions equal in money by construction. Another holds that equal exposure is not equal risk, because instruments travel different distances in a day, so it derives size from the money value of a defined price move, or from a measure of how far the instrument has recently ranged, instead. Each convention has a stated limit. Exposure alone ignores how far a price typically moves. A size derived from a recent range depends on the lookback window chosen, so two windows give two answers on the same instrument on the same day, and a past range is a description of what has happened rather than a forecast of what follows.

The second disagreement is about the vocabulary itself, and it is more practical than it sounds. Providers do not label these fields identically. Volume in a shares CFD is stated in shares by some and in lots of a stated number of shares by others, index contracts are described as contracts by some platforms and as lots by others, and the same field is labelled volume in one place and size in another. The word settles nothing. The specification against the individual symbol does, which is why a size worked out under one provider's convention does not transfer to another without being read again.