Friday, July 19, 2024

Lot

In this article, We learn about “Lot”.Let’s Go!

A lot refers to the minimum available trade size you can make when trading a currency pair on the Forex market.

Currencies are traded in lots, which are currency lots used to standardize the quantities traded in Forex.

A The standard lot is 100,000 currency units. There are also smaller sizes available, called Mini Lot and Micro Lot, valued at 10,000 and 1000 units respectively.

ManyUnit quantityStandard100,000Mini10,000Micro1,000

In the past, spot FX was traded in lots of 100, 1,000, 10,000 or 100,000 units

Most forex brokers refer to lot sizes in increments of 1,000 (micro lots).

Learn about micro-lots

Micro lots represent 1,000 units of any currency.

A one pip move on

a micro lot corresponds to a change of $0.10.

For example, if you buy 1,000 USD/JPY at an exchange rate of 109.00 JPY.

The

exchange rate moved to ¥109.50, which means USD/JPY moved 50 pips.

You have earned $5.

50 points x $0.10 = $5

If the exchange rate drops 50 points to 108.50 yen, you will lose $5.

Below are examples of pip values ​​for EUR/USD and USD/JPY, depending on the lot size.

A pairClose pricePoint value per:UnitStandard handSmall batchSmall batchNano BatchEUR/USDAny$0.0001$10$1$0.1$0.01USD/JPY1 US dollar = 80 yen$0.000125$12.5$1.25$0.125$0.0125

In the interbank market, banks trade with each other through online electronic platforms, and the standard transaction size or standard lot size is 1 million units (in base currency). “Barker” is a USD-based currency pair of one million units . One “code” is 1 billion units.

If you want to learn more foreign exchange trading knowledge, please click: Trading Education.

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