How contract size works
Contract size is the amount of the underlying asset that one contract represents. It converts a price move into a money result, so it is the link between the chart and your profit and loss. In forex one standard lot is 100,000 units; an index CFD might be one contract per point; a commodity CFD has its own defined unit. Know the contract size and you know what each tick is worth.
Worked example
You trade an index CFD where one contract equals $1 per point. You buy 10 contracts and the index rises 30 points: that is 10 x $1 x 30 = $300. On a different instrument where one contract is $5 per point, the same 30-point move on 10 contracts would be $1,500. Identical price action, very different money, because the contract size differs. Always check it before sizing.
Why contract size drives risk
Your real risk is contract size times the distance to your stop, not the number of contracts alone. Two traders with ten contracts each can carry wildly different exposure if the contract sizes differ. On Volity, knowing the contract size for each instrument lets you set position size so the loss at your stop stays within 1 to 2 percent of equity, the foundation of survival.
Why it matters
Ignoring contract size is how traders accidentally take ten times the risk they intended, because the contract count looks the same while the per-point value is not. Always translate contracts into money-per-point before entering. Related: lot size and position sizing.
Learn more in our CFD trading guide.
