Trading volume

Trading volume is a key concept that defines the size of a trade and directly affects risk and margin requirements. This article explains what trading volume is, how it is calculated, and why it matters when trading with Weltrade.

Volume (or turnover) is an essential part of any business as it’s one of the metrics that allows us to evaluate the size of that business.

Turnover of your business can be calculated in units for a period of time (like: every year I sell 1000 of some exchange units, for example, cows).

Or it can be calculated in money: every year I sell 1000 cows and each cow costs USD666, then my yearly turnover will be USD666,000.

And if you want to compare your business size with a competitor in Europe, who says his yearly turnover is EUR500,000 you must convert your USD turnover into EUR.

Provided the rate is 1.18 USD per 1 EUR, the size of your turnover in EUR will be 564,406.77 which means you’re bigger than your European rival.

Each asset that you trade in MetaTrader platform is measured in units. What kind of units - depends on the asset. For shares it will be shares, for FX pairs it will be currency units, for gold it will be ounces etc.

But when you make trades in MetaTrader - you don’t trade in units, you trade in lots (and this is what’s shown in your trading terminal). Lot (or trading lot) is a standardized quantity of any instrument that makes trading easier: instead of buying 1,000,000 units a currency (a big number with lots of zeros that takes space and can confuse people and lead them to making a mistake), you buy 10 lots (standard lot for currencies is 100,000 units).

In MT5 the details on how much is 1 lot for each instrument can be found if you right click on a symbol in your Market Watch window and choose Specification.

Here are the ways of talking about your trading volume if you open a 0.01 lot position of some asset:

0.01 lot (and that will be your volume in lots)

or

0.01 lot x lot size = some amount of units (and that will be your volume in units)

or

0.01 lot x lot size x 1 unit price in USD (and that will be your volume in USD)