What is a Lot in Forex?

When you want to trade on Forex market you have to know your position, price and last, but not least, the lot. This means that you have to know the size of your trade. Before you trade any kind of lot, you have to know that the lot size has a major impact of the risk of that trading. So finding the best lot size might seem hard, but not impossible. You can use a risk management calculator, that helps you to determinate the right lot size using your current account.

To understand better we are going to do an example. If your trade on the market and the trade moves with 100 PIP on a small lot size the impact it’s going to be small, but if your lot size it is large, you are going to suffer a very hard lost. On the Forex market you have to choose between different lot sizes.

First you have micro lots. Like its name, micro lots are the smallest lots that a broker can use. A micro lot equals 1000 units of your accounting funding currency. If you have a US dollars account, then 1000 units equals 1000$. If you’re not so familiar with the Forex market, just use these kind of lots, where the risk is minimum.

On the other hand there are standard lots. A standard lot equals 100k, that in USD is 100.000$. This kind of lot has an average pip of 10$/pip. These kind of lots are for institutional sized accounts, as you will need to have at least 25.000$ in your account to trade with standard lots.