7 Easy Steps To Understand "LOT" In Forexby Ashik Topasiafx Editor at TopAsiaFX
One of the key terms that you are bound to come across time and again in Forex trading is " lot". Here I will give more details about what exactly a lot in Forex so that the next time you trade a lot, you will understand exactly what is involved.
Beyond that, we will see many different types of Forex you can find when trading with a top Forex broker you.
Some of these would be better suited for new merchants or those with a lot of desire to drive a bit on the safer side when it comes to risk management in trading.
Forex Lot Type Explained
In the simplest of forms, Forex much as you know in Forex trading is simply a measurement unit of currency and a way to determine how many units of the currency needed to trade.
A lot about trading Forex and terminology is still widely used in almost all brokers trading up in this sector. Although some now allow for a more flexible trading style, mention many Forex is still very prevalent.
You'll also hear a lot of mention of many Forex, and trading a lot if you choose a new broker and check out some of the best Forex broker reviews.
With that in mind, there are usually 4 Forex lot sizes that you will find when trading Forex.
Standard Lot - 100,000 units Currencies
Standards of many Forex is what you'll see most often when trading with a standard account type most Forex brokers. The standard lot is 100,000 units of currency, so it usually has a value of $ 100,000 if we take a trade in the US dollar as an example.
The majority of experienced Forex traders who are used to trading at this level and it should be noted that due to the leverage in Forex, you do not need to have a full $ 100,000 in your bank to trade a standard lot.
When most refer to many in Forex trading, it is also a typical value they refer to.
Mini Lot - 10,000 Currency Unit
Many mini Forex is a great choice for those who might want to trade with lower, or there may be no effect at all.
Type more very common with most of the top Forex brokers who offer many types containing 10,000 units of currency that will have a typical value of $ 10,000 if trading USD.
Although they are referred to as "mini" traded at this level is still a very significant investment for many traders.
Micro Lot - 1,000 Currency Unit
Many micro Forex is the next step on the ladder of smaller trade again. Coming in at just 1,000 units of the currency means that the value is in the case of our example USD trading will be just $ 1000.
While many micro and micro Forex trading accounts provided by some brokers, they are not always accessible. However, they provide an ideal platform for new Forex traders to get a good value for the money flavor industry.
This level can provide an excellent springboard for those who may have tried to account nano or want to move directly from the demo trading account without doing 100%.
Nano Lot - 100 Currency Unit
Trade's smallest lot size available is much nano. The trading lot consists of 100 units of currency which has a total value of $ 100 in the case of our example USD trading.
Nano is much more rare to see, but of course still available at many top Forex trading brokers.
It was a lot of initial sizes, which is ideal for those who want to try Forex trading for the first time. It offers real-money trading outside trading demo accounts, but with a much smaller level of risk involved.
Lot Differences Between Forex Broker
As with everything, there is some room for variation in the Forex trading sector. The terms described above are commonly used by both traders and brokers across the board.
You sometimes will see many described in decimal terms compared to many of the standard forex as follows:
Mini Lot: 0.1 Plenty of Standards
Micro Lot: 0.01 Many Standard
Nano Lot: 0001 Many Standard
It is exactly the same in most cases. Many brokers also make a "cent accounts" provided that often cater to smaller lot sizes in much micro and nano may be a lot. There are also some brokers that will allow trading with as little as 1 unit of currency ($ 1).
Lot the best size for the Forex Market Trading?
Forex lot size that works well for you really depends on a number of factors based on how you want to trade. Among them is how much you have to risk, and how much of your capital you really want to risk.
Once you have decided this, you will be better placed to choose the ideal lot size for you. You also have to remember that you can still engage leverage when trading with a smaller lot size, although the ratio will not increase.
Normally, when you gain more experience in the Forex trading industry, attitude and willingness to take a little more risk to lend itself well to increase the lot size.
With this in mind then, many would recommend passing on a demo account to use nano or micro-lot size. Once you have learned the ropes with this, you can proceed to the next level.
Also, DEMO accounts are best if you want to test the accuracy of the Forex signal which your service provider gives you.
If you are dealing with a top Forex broker, you will note that many of them may have a loyalty, an active trader, or a rebate program in place.
These traders are often rewarded based on the number of their standard lot trade. Considering that then, perhaps one point to think about when choosing your Forex lot size.
Created on Feb 4th 2020 10:01. Viewed 245 times.