Forex trading isn’t about buying a couple of euros or dollars like you would at an airport exchange. Trades happen in lots, which are fixed amounts of currency used to standardise trade sizes. But why does this system exist, and how does it affect your trades?
Why Are Lots Used?
Currencies move in tiny increments, typically the fourth decimal place, known as a pip. If traders bought and sold single units of currency, the price changes would be too small to make a difference. Lots solve this by grouping trades into meaningful sizes.
The Different Lot Sizes
Forex offers four main lot sizes:
- Standard lot – 100,000 currency units
- Mini lot – 10,000 units
- Micro lot – 1,000 units
- Nano lot – 100 units
The lot size you choose affects your risk and potential profit. For example, in a standard lot, a single pip movement is worth £10, while in a nano lot, it’s just £0.01.
Leverage and Risk
Most brokers offer leverage, letting traders control larger positions without putting up the full amount. A 30:1 leverage means you only need £1,000 to control a £30,000 trade. While this increases potential profits, it also raises the risk of bigger losses.
Understanding lot sizes isn’t just a technicality—it directly affects your strategy, risk management, and long-term success. Pick the right lot size for your account and risk tolerance, and you’ll have better control over your trades.
The Lot Calculator
Try the lot calculator below to understand how lot sizes affect your potential gains or losses in pips. This is for demonstration purposes only—depending on the currency pair you’re trading, the pip value may vary.
