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Min size of lots

Discussion in 'General Forex Talk' started by COB, Aug 15, 2008.

  1. COB

    COB Recruit

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    What is the min size of lot that I can trade, can I trade less than 1.0 and how does this effect the size of commission?
     
  2. Pharaoh

    Pharaoh Colonel

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    That depends on the account type and the broker.

    For trading a standard lot, a 1 pip movement is $10 for xxxUSD pairs. 1 pip on a minilot would be $1. 1 pip on a microlot would be 10 cents. 1 pip on a nanolot would be 1 cent.

    Most brokers at least allow minilots. Many brokers offer microlots, and a few brokers offer nanolots.

    Since spread is in pips, spread charges will be proportional to the lot sizes you use. Some brokers may charge different spreads based on whether you have a regular or mini account. Some confuse things further by offering other variations (i.e. "Platinum" accounts for those with $50k or more).

    For those brokers that charge a commission on top of spread, the commission should be proportionate to the size of the trade (read the fine print - things are not always as they should be).

    Some account managers charge an additional fee per trade. This may or may not be proportional to the size of the trade. Read the details of any LPOA very carefully.
     
  3. Sergei

    Sergei Private

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    Some of them complicate things even further by charging you different commissions based on monthy volume (the more you trade, the less they charge per trade).

    Anyway, nowadays most decent brokers, in one way or another, offer "fractional" lot sizes because they realize most retail traders can't properly manage an account with 100,000 lots because they are simply not as capitalized as a large institution and need the extra "resolution" or "granularity" that smaller lot sizes allow.

    This can truly make or break you as a trader so your question is a very important one.
     
  4. nahiyar

    nahiyar Private, 1st Class

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    It is safe to select minimum lot size until you are not experienced in trading. I usually trade in 0.3 to 0.5 lot . Big lot involves more risk in trading at every movement we face more profit or loss per pips.
     
  5. EURUSD

    EURUSD Sergeant Major

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    Yes depending with broker regulation, some broker might use minimum lot size even 0.01 lot but another broker having minimum lot size 0.10 and as trader will now if they already trying platform broker or they reading term condition broker
     
  6. Mike James

    Mike James Recruit

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    Most amateur traders jump to open big lot size as it brings immense profit. But a big lot size can transform into a bad dream. You can get a margin call. Don't risk more than 2% of your capital. You didn't say how much capital you have. Lot size depends on trading strategy and capital.
     
  7. Aubrey Aubrey

    Aubrey Aubrey Recruit

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    Actually there are no bindings to trade with big or small lots. But big lot trading contains more risk than small lot trading. I wanted to say if anyone has just started their trading career they should start with small lots. It has less risk to lose money. But after spending some time in forex business by acquiring knowledge and gathering experience trader can invest in big lots of trading.
     
  8. Rizog

    Rizog Private, 1st Class

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    Everything depends on where to invest and what to buy. In case of little purchases just keep less risks. Of course, this is a basic of trading - the theory.
     
  9. nahiyar

    nahiyar Private, 1st Class

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    Yes traders can get high risks when they had ability to deal them. Beginners should deal in micro lots or mini lots as much mini they can trade. This practice will be safe one to gain experience and reduce risk of loss. Then trading skill will tell a trader when and how big lot will be a wise decision.
     
  10. Nisoro

    Nisoro Recruit

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    As a beginner, it is important to choose a smaller lot size even though the commission could be slightly higher in that case. However, that would give you longer stay in the market and watch the movements more comprehensively. However, stay put for some time with the same lot size even when your trades start becoming profitable.
     

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