Understanding trading volume can help you make quick and informed decisions when trading. It enables you to set and reach your trading goals, plus achieve your ideal premier status. Knowing how to figure out the trading volume is quite important in forex trading as it's used in other crucial calculations like margin and pip value.
In simple terms, trading volume (TV) refers to the amount of base currency a trader is trading. It is calculated using the following formula:
Trading volume (TV) = Number of lots x contract size
A client placed an order to Buy 3 lots EURUSD.
TV = 3 x 100 000 EUR
= 300 000 EUR
A client placed an order to Sell 3 lots UKOIL.
TV = 3 x 1 000 BBL
Note: Trading volume is always calculated in the base currency.
Lot and contract size
Lot refers to the standard unit size of a transaction. A standard lot is typically equal to 100 000 units of the base currency. Several lot types available include:
- Standard lot: 1 lot = 100 000 units
- Mini lot: 0.1 lot = 10 000 units
- Micro lot: 0.01 lot = 1 000 units
- Nano lot: 0.001 lot = 100 units
Contract size is a fixed value which denotes the amount of base currency in 1 lot. It varies based on the trading instrument.
|Instrument group||Contract size|
*For cryptocurrencies, the contract size can vary based on the instrument. Refer to this article for details.
Read more on the essential trading terms to understand such as spread, equity, margin, and more.
Let us take a look at a few instances where calculating TV can come in handy:
The trading volume determines which Premier Program clients qualify for, either Premier Preferred, Premier Elite, or Premier Signature.
One of the requirements when requesting free VPS hosting is having at least USD 500 000 (or equivalent), along with an overall account balance between USD 500 and 999. TV calculated for VPS is calculated as a total of both opening and closing a position.
Trading volume (as a total of both opening and closing) is calculated and used as one of the main qualification criteria to apply for various partner-level upgrades such as Advanced Partner and Introducing Broker. Additionally, the TV for your referred clients is calculated to check if you are eligible for prizes under the Partner Loyalty Program.