What is Lots in forex ?

What is a lot?

Before you start asking yourself, what is lot size or even begin learning how to trade forex, you’re going to need to know what a lot actually is. There are some key units of measurements that you must understand in order to trade forex successfully.

Firstly, a lot is a unit of measurement used to denote the amount of currency units bought or sold in a transaction. Whenever you place an order to trade a position, that order will be quoted in lot sizes.

Forex lot size chart – How many units?

Which brings us to what is a forex lot size – The standard lot size is 100,000 units of a currency but there are others. You may also find mini, micro, and nano lot sizes. A mini lot size is 10,000 units, a micro is 1,000 units, and finally a nano is 100 units. These will all be found in a broker provided lot size chart.

Why would you choose one lot over another? Each lot size holds an advantage.

Nano lot – Very rarely seen in FX trading but it is the most flexible of the lot sizes. Nano lots are useful if you are starting out small and want to test the waters of FX trading.

Micro lot – A micro lot is typically the smallest lot size tradable, as nano lots are so rarely seen. At 1000 units, you can trade on a smaller account which is why micro lofts are often used by novice traders who want to reduce potential losses.

Mini lot – To get the most benefit out of trading as a beginner, it would still be recommended to trade in mini lots. Many advanced traders use mini lots to gain greater control over their forex positions.

Standard lot – Most traders with retail investor accounts won’t ever use this lot size. It feels tempting to trade at this size but one really does need the capital to do so safely. Standard lots are for traders who understand risk management well.

r use this lot size. It feels tempting to trade at this size but one really does need the capital to do so safely. Standard lots are for traders who understand risk management well.