The standard size in which you deal:a lot sets how big each pip will feel.
A standardised unit of trading.
A standard lot is 100,000 units of the base currency, a mini lot is 10,000, a micro lot is 1,000, and a nano lot is 100 units.
In plain words
A lot is the standard unit in which the size of a trade is measured. In foreign exchange one standard lot is 100,000 units of the first currency in the pair; a mini lot is 10,000 units, a micro lot 1,000, and some brokers also offer a nano lot of 100.
See it move
Mini lot is about a tenth of Standard lot (as in the lesson)
Why it matters
The lot size decides how much each pip of movement is worth, so it is the setting that scales both profit and loss. Trade sizes are usually entered in lots or decimals of a lot, such as 0.10 for a mini lot.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A pair quoted to four decimals moves 20 pips, and the same move is measured on three trade sizes.
- 1Standard lot (1.00)10 per pip × 20 = 200
- 2Mini lot (0.10)1 per pip × 20 = 20
- 3Micro lot (0.01)0.10 per pip × 20 = 2
The same 20-pip move is worth 200, 20 or 2 units of the quote currency, depending only on the lot size.
A common mistake
A lot is not a fixed sum of money. It is a quantity of the base currency, so its value in a trader’s own currency depends on the exchange rate, and for other instruments such as gold or indices the contract size is different.
Check yourself
Learn more
- Academy lessonPosition sizingLot sizes, the percent-risk model, fixed-fractional sizing and the Kelly criterion, with the formulae and a worked example.
- GuidePosition sizing: the arithmetic of risk per tradeFixed percentage, fixed amount, Kelly and volatility-based sizing, with the formula and a worked example for each.
Educational information, not investment advice or a recommendation to trade.