Lot size in Forex refers to the volume or number of currency units you trade in a single transaction. It determines the monetary value of each pip movement.
In Forex, trades are executed in lots—standardized units of currency volume. Choosing the right lot size is essential for effective risk management, as it directly affects how much you gain or lose with every pip movement.
There are four main types of lot sizes:
The larger the lot size, the greater the pip value, and the higher the risk. For example, with a standard lot, 1 pip typically equals $10. With a micro lot, 1 pip is worth about $0.10.
Lot size selection should align with your account balance, leverage level, and risk tolerance. Many modern platforms calculate pip value and margin requirements automatically based on the lot size.
A trader opens a buy position on EUR/USD with a mini lot (0.1 lot). If the price moves 50 pips in their favor, they gain about $50.
Pip, Pipette, Leverage, Margin, Risk Management, Position Size
Forex / Trade Mechanics
Lot size can make or break your trading account. Always define your risk per trade before choosing your lot size—never guess.
