In plain English
What Contract size means
Contract size is a product specification, not a universal CFD standard. One share CFD may represent one share, while an index CFD may be worth a stated cash amount for each index point and a commodity CFD may represent a stated quantity of the commodity. Together with the number of contracts and the price movement, it determines exposure and profit or loss. The notional value commonly changes as the market price changes, even when the contract count stays the same.
Why it matters
A small-looking trade can carry substantial exposure if each contract represents a large quantity or a high cash value per point. Contract size is therefore essential for calculating position size, margin needs, tick value, and the financial effect of a stop-loss level. It must be checked separately for each instrument and account type.
Example
Assume an index CFD has a contract size of $10 per index point. A client buys 2 contracts at 5,000 and closes at 5,012. Ignoring all charges, the price rises 12 points, so profit is 2 × $10 × 12 = $240. A 12-point fall would produce a $240 loss.
Quick answers
Common questions
Is CFD contract size always one unit of the underlying asset?+
No. A share CFD may represent one share, but index, commodity, and currency CFDs often use a cash value per point, a unit quantity, or another provider-defined multiplier.
How does contract size affect profit or loss?+
For a linear contract, multiply the price movement by the contract size and number of contracts. The specification may use points, shares, units, or another measure, so the calculation must match that instrument.
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