Notional value

Notional value is the size of your exposure: what the position would be worth if you owned the underlying outright. With leveraged products you only deposit margin, a fraction of the notional value, but profits and losses are calculated on the whole amount.

• Notional value = [contract size](/glossary/contract-size) × lots × price (converted into your account currency if needed)

Examples

Illustrative figures:

• One standard lot of EUR/USD at 1.0850: 100,000 euros, which is 100,000 × 1.0850 = $108,500 of exposure.
• 0.3 lots of gold at $2,500 with a 100-ounce contract: 0.3 × 100 × 2,500 = $75,000.
• One lot of USD/JPY: 100,000 dollars, whatever the exchange rate, because the dollar is the base currency.

With 30:1 leverage, the EUR/USD trade needs about $3,617 of margin, yet a 1% move in the exchange rate changes its value by about $1,085. Measured against the margin, that is a 30% swing.

Why it matters

Notional value is the honest measure of how big a trade is. Two traders with the same account size can hold very different notional exposures, and the one with the larger exposure will see equity move faster in both directions. Dividing total notional exposure by account equity gives your effective leverage, which is usually more useful than the maximum leverage the broker allows.

Notional value also drives some costs: overnight financing on CFDs is normally calculated as an annual rate applied to the notional amount. The margin calculator shows notional value alongside margin, and the guide to how to calculate forex margin and leverage works through more examples.