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. A lot is the smallest available trade size that you can place when trading currency pairs in the foreign exchange market.

You will come across different lot sizes in your trading career. 

Lot size matters

There are typically 4 forex lot sizes that you will come across when trading forex.

lots

Standard Lots – 100,000 currency units

standard lots

The standard forex lot is what you will see most regularly when trading with the standard account types of many forex brokers. 

A standard lot is a 100,000-unit lot. 

Trading with this size of position means that each pip in your trade would be worth $10.

How much is 1 standard lot?

In Forex, 1 standard lot refers to the volume of 100.000 units. So when you buy 1 lot of a forex pair, that means you purchased 100.000 units from the base currency.

Let’s say that you want to buy EUR/USD and the exchange rate is 1.17.

When you buy 1 lot of EUR/USD you will be making $117.000 worth of purchase.

Mini Lots – 10,000 currency units

mini lots

A mini forex lot is a great choice for those who may want to trade with slightly lower amounts. 

But don’t let the name fool you! 

Even though they are referred to as mini lots, they still represent a very significant investment for many traders.

Mini lot is equal to 10% of standard lot (100.000 x 0.10 = 10.000 units). 

That is 10,000 units of your account funding currency. 

If you are using a dollar-based account and trading a dollar-based pair, each pip in your trade would be worth $1.00.

How much is 1 mini lot?

In Forex, 1 mini lot refers to the volume of 10.000 units. So when you buy 1 lot of a forex pair, that means you purchased 10.000 units from the base currency.

Let’s say that you want to buy EUR/USD and the exchange rate is 1.17.

When you buy 1 lot of EUR/USD you will be making $11.700 worth of purchase.

Micro Lots – 1,000 currency units

micro lot

Micro lots are one of the smallest tradable lots. They provide a safe platform for beginner traders to get a good value for money taste of the industry, whilst keeping the risk to a minimum.

Micro lot is equal to 1% of standard lot (100.000 x 0.01 = 1.000 units).

If your account is funded in U.S. dollars, this means that a micro lot is $1,000 worth of the base currency you want to trade, and each pip would be worth 10 cents. 

How much is 1 micro lot?

In Forex, 1 micro lot refers to the volume of 1.000 units. So when you buy 1 lot of a forex pair, that means you purchased 1.000 units from the base currency.

Let’s say that you want to buy EUR/USD and the exchange rate is 1.17.

When you buy 1 lot of EUR/USD you will be making $1,170 worth of purchase.

Nano Lots – 100 currency units

nano lot

Nano lot is the smallest trading lot size available. It offers real money trading beyond a demo trading account, but with a much smaller level of risk involved.

This trading lot consists of 100 currency units which have a total value of $100 in the case of our USD trading example. Trading with this size of position means that each pip in your trade would be worth $0.1 cent. 

How much is 1 nano lot?

In Forex, 1 nano lot refers to the volume of 100 units. So when you buy 1 lot of a forex pair, that means you purchased 100 units from the base currency.

Let’s say that you want to buy EUR/USD and the exchange rate is 1.17.

When you buy 1 lot of EUR/USD you will be making $117 worth of purchase.

Which lot size is best for Forex market trading? 

The forex lot size that works well for you depends on a number of different factors based on how you want to trade. 

Among these is how much you have to risk, and how much of your money you actually WANT to risk. 

We recommend that you have at least $100,000 of trading capital before opening a standard account, $10,000 for a mini account, or $1,000 for a micro account.

But remember, even small movements in the market could send you to the point of no return.

No need to worry about this just now though! Once you have completed the HowToTrade Trading Academy, you will find it easy to choose the ideal lot size for you.