What is a lot in forex?

Fat Finger

Private
Messages
14
A lot in forex is the standard unit that traders use to measure the size of your trade. A standard lot is, in simple terms, 100,000 units of the base currency, which is the currency to the left in any pair. For example, 1 standard lot of USDJPY (here the USD is the base currency) equals 100,000 USD bought against the Japanese yen. The word standard contract is also sometimes used to refer to a standard lot.

Traders usually do not need to pay 100,000 USD to enter a 1 lot position. Instead, they rely on leverage from the broker and need to deposit only a portion of that amount. The higher the leverage, the smaller the amount they need to deposit.

Traders who have large accounts can trade standard lots, whereas traders with small accounts can trade mini lots and micro lots. Both mini lots and micro lots represent a portion of the standard lot.

forex-lot-forexpeacearmy.jpg


A mini lot is one tenth of a standard lot or 10,000 units of the base currency. If you are trading the EURUSD, a mini lot equals 10,000 Euros.

A micro lot is one-hundredth of a standard lot or 1,000 units of the base currency, so if you are buying one micro lot of AUDCAD, you need 1,000 Australian dollars.

Recently, the nano lot has been introduced and it equals 100 units of the base currency, so if you buy one nano lot of NZDUSD, you are purchasing 100 New Zealand dollars against the US dollar.

As a rule, the bigger the size of your trade (that is, the more lots or partial lots), the bigger the variations in your profit and loss are when the price moves. With a smaller trade size, the fluctuations decrease, and it enables you to manage risk better.
 

steveday76

Private, 1st Class
Messages
60
A lot in forex is the standard unit that traders use to measure the size of your trade. A standard lot is, in simple terms, 100,000 units of the base currency, which is the currency to the left in any pair. For example, 1 standard lot of USDJPY (here the USD is the base currency) equals 100,000 USD bought against the Japanese yen. The word standard contract is also sometimes used to refer to a standard lot.

Traders usually do not need to pay 100,000 USD to enter a 1 lot position. Instead, they rely on leverage from the broker and need to deposit only a portion of that amount. The higher the leverage, the smaller the amount they need to deposit.

Traders who have large accounts can trade standard lots, whereas traders with small accounts can trade mini lots and micro lots. Both mini lots and micro lots represent a portion of the standard lot.

View attachment 54157

A mini lot is one tenth of a standard lot or 10,000 units of the base currency. If you are trading the EURUSD, a mini lot equals 10,000 Euros.

A micro lot is one-hundredth of a standard lot or 1,000 units of the base currency, so if you are buying one micro lot of AUDCAD, you need 1,000 Australian dollars.

Recently, the nano lot has been introduced and it equals 100 units of the base currency, so if you buy one nano lot of NZDUSD, you are purchasing 100 New Zealand dollars against the US dollar.

As a rule, the bigger the size of your trade (that is, the more lots or partial lots), the bigger the variations in your profit and loss are when the price moves. With a smaller trade size, the fluctuations decrease, and it enables you to manage risk better.
Well explained.
 

Alex Bainbridge

Private, 1st Class
Messages
27
A lot in forex is the standard unit that traders use to measure the size of your trade. A standard lot is, in simple terms, 100,000 units of the base currency, which is the currency to the left in any pair. For example, 1 standard lot of USDJPY (here the USD is the base currency) equals 100,000 USD bought against the Japanese yen. The word standard contract is also sometimes used to refer to a standard lot.

Traders usually do not need to pay 100,000 USD to enter a 1 lot position. Instead, they rely on leverage from the broker and need to deposit only a portion of that amount. The higher the leverage, the smaller the amount they need to deposit.

Traders who have large accounts can trade standard lots, whereas traders with small accounts can trade mini lots and micro lots. Both mini lots and micro lots represent a portion of the standard lot.

View attachment 54157

A mini lot is one tenth of a standard lot or 10,000 units of the base currency. If you are trading the EURUSD, a mini lot equals 10,000 Euros.

A micro lot is one-hundredth of a standard lot or 1,000 units of the base currency, so if you are buying one micro lot of AUDCAD, you need 1,000 Australian dollars.

Recently, the nano lot has been introduced and it equals 100 units of the base currency, so if you buy one nano lot of NZDUSD, you are purchasing 100 New Zealand dollars against the US dollar.

As a rule, the bigger the size of your trade (that is, the more lots or partial lots), the bigger the variations in your profit and loss are when the price moves. With a smaller trade size, the fluctuations decrease, and it enables you to manage risk better.
Always a great explanation here
 

Macy Jones

Recruit
Messages
7
Let's review our forex basics, best answers wanted. What is a lot in forex?
Forex is commonly traded in specific amounts called lots, or basically the number of currency units you will buy or sell. The standard size for a lot is 100,000 units of currency, and now, there are also mini, micro, and nano lot sizes that are 10,000, 1,000, and 100 units.
 

sivemorten

NOT Sive Morton
Messages
2
There are 3 types of lots - Standard lot is of 1,00,000 units, micro lot is of 1,000 units and mini lots is of 10,000 units. Traders need to understand the lot size of currency pairs in detail before placing a trade. There are different lot sizes for Forex, indices and commodities.
 
Messages
192
Forex is commonly traded in specific amounts called lots, or basically the number of currency units you will buy or sell. The standard size for a lot is 100,000 units of currency, and now, there are also mini, micro, and nano lot sizes that are 10,000, 1,000, and 100 units.
well explained here too. simple! i only trade 0.1 max
 

compu-forex

Sergeant
Messages
133
As suggested, a standard lot is 100 000 units of base currency. However, with the introduction of commodities, metals and other CFD's, a lot has evolved into something a little more complex. Look at Gold(XAUUSD), for example, you can imagine 100 000 ounces of XAU @ $2000 a pop is going to be a massive trade worth $200 million.

To solve this problem, brokers adjust the contract size. So EURUSD contract size would be 100 000, or 1 standard lot as we know it. XAU contract size is, typically, 100 unit.

It is always a good idea to check the contract specifications for any asset you want to trade because they vary from broker to broker.

This is how you check the contract size for Gold :-

specification.jpg


Right-click on XAUUSD in the market watch window(Where you see the prices). Select "Specification" from the context menu.

contract size.JPG


In the dialogue box that appears, you can see the contract size. You will also find the minimum lot size permitted for that asset at that broker.

So a XAUUSD trade of 1 full lot is worth around $200 000 or roughly double a 1 lot EURUSD trade.
 
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