How to calculate the notional value of a trade

Modified on Thu, 22 Aug at 1:06 PM

In financial markets, we often talk about contracts with standardized volumes, so we may not know the real value of our trade. Therefore, we must learn to calculate the notional value.

How do I calculate the notional value of my trade in Forex?

In Forex, the volume of our operations is standardized, with the basic unit of measurement being 1 lot, which is equivalent to 100,000 units of the base currency.

Notional value = Volume * 100.000

Volume = 1 lot EURUSD --> Notional value = 1*100.000 = 100.000 EUR
Volume = 0,5 lots EURUSD --> Notional value = 0,5*100.000 = 50.000 EUR
Volume = 2 lots EURUSD --> Notional value = 2*100.000 = 200.000 EUR

How do I calculate the notional value of my index CFD trade?

In the stock markets, indices are quoted in points, so to calculate the notional value of a transaction, we need to convert the points into currency (either EUR, USD, GBP, etc.) using a multiplier; the following formula is used to calculate the notional value.

Notional value = volume* multiplier *price

Please note that the multiplier on our index CFDs will always be 1 USD/EUR/GBP per point to make this calculation easier.

Let's see below some examples of the NQ100 and GER40 indices.

* Let's assume a quote value on NQ100 of 19700 points

Volume = 1 lot --> Notional value = 1*1 USD/point*19700 = 19700 USD
Volume = 0,5 lots --> Notional value = 0,5*1 USD/point*19700 = 9850 USD
Volume = 2 lots --> Notional value = 2*1 USD/point*19700 = 39400 USD

* Let's assume a quote value on GER40 of 18100 points

Volume = 1 lot --> Notional value = 1*1 EUR/point*18100 = 18100 EUR
Volume = 0,5 lots --> Notional value = 0,5*1 EUR/point*18100 = 9050 EUR
Volume = 2 lots --> Notional value = 2*1 EUR/point*18100 = 36200 EUR

How do I calculate the notional value of my Commodity CFD trade?

In the case of commodities, to calculate the notional value of a trade, we need to consider that 1 contract can include different units of the commodity (ounces, barrels, etc.). Therefore, we need to include the size of the contract in the formula.

Notional value = volume*contract size*price

An example of the notional value of a trade in Gold CFD, whose contract size is 100 ounces

* Let's assume a quote value on Gold CFD of 2300 USD

Volume = 1 lot --> Notional value = 1*100*2300 = 230000 USD
Volume = 0,5 lots --> Notional value = 0,5*100*2300 = 115000 USD
Volume = 2 lots --> Notional value = 2*100*2300 = 460000 USD

An example of the notional value of a trade in Brent, whose contract size is 100 barrels

* Let's assume a quote value on Brent of 80 USD

Volume = 1 lot --> Notional value = 1*100*80 = 8000 USD
Volume = 0,5 lots --> Notional value = 0,5*100*80 = 4000 USD
Volume = 2 lots --> Notional value = 2*100*80 = 16000 USD

How do I calculate the notional value of my share or share CFD trade?

In this case, calculating the notional value is easier since we will only have to consider the number of shares and the price. Therefore, the formula will be the following:

Notional value = shares*price

An example of the notional value of a trade in Tesla with a quote value of 190 USD

Volume = 1 share --> Notional value = 1*190 = 190 USD
Volume = 100 shares --> Notional value = 100*190 = 19000 USD
Volume = 20 shares --> Notional value = 20*190 = 3800 USD

If you have any questions, do not hesitate to contact us.