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Aug 6th, 2022
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How to size contract

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Josh Martinez from traders agency.com discusses the first steps to becoming a trader. In the previous video, they covered finding a future broker and understanding contract values. This video focuses on starting out as a beginner and being able to place your first trade. The goal is to eventually press the Buy or Sell button in the market. Understanding whether to buy or sell in futures is crucial for entering the market successfully.

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Contract Sizes. Each standard lot traded in the Forex market is a 100,000 (of the base currency) contract. In other words, when trading one lot in a standard account, a trader is essentially placing a $100,000 trade in the market. Without leverage, many investors would not be able to afford such a transaction.
A lot size in futures is a minimum ticket size of shares that you can trade in futures. When trading futures and options, you can only buy and sell these products in a minimum of one lot or multiples of the lot size. For example, the lot size of Nifty is 75 units so you can only trade Nifty in multiples of 75.
Each futures contract has a standard size that has been set by the futures exchange on which it trades. As an example, the contract size for gold futures is 100 troy ounces. That means when you buy one contract of gold futures, you have control of 100 troy ounces of gold.
What Is Contract Size? The term contract size refers to the deliverable quantity of a stock, commodity, or financial instrument that underlies a futures or options contract. It is a standardized amount that tells traders the exact quantities that are being bought or sold based on the terms of the contract.
Contract Sizes. Each standard lot traded in the Forex market is a 100,000 (of the base currency) contract. In other words, when trading one lot in a standard account, a trader is essentially placing a $100,000 trade in the market. Without leverage, many investors would not be able to afford such a transaction.
Description: In the stock market, lot size refers to the number of shares you buy in one transaction. In options trading, lot size represents the total number of contracts contained in one derivative security. The theory of lot size allows financial markets to regulate price quotes.
Description: In the stock market, lot size refers to the number of shares you buy in one transaction. In options trading, lot size represents the total number of contracts contained in one derivative security. The theory of lot size allows financial markets to regulate price quotes.
Use the formula: Maximum risk in dollars (trade risk in ticks x tick value) = position size. $100 / (4 x $12.50) = 2 contracts.
For instance, in forex the standard size of one contract is typically 100,000 units of the currency.
The term contract size refers to the deliverable quantity of a stock, commodity, or financial instrument that underlies a futures or options contract. It is a standardized amount that tells traders the exact quantities that are being bought or sold based on the terms of the contract.

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