Module 2: Pips, lots and leverage · Lesson 6 of 13
Lot sizes explained
3 min read
A lot is the unit used to size a forex trade. A standard lot is 100,000 units of the base currency, a mini lot is 10,000 units and a micro lot is 1,000 units.
The three common lot sizes
| Lot type | Units of base currency | Lots on a platform | Approx. pip value on EUR/USD |
|---|---|---|---|
| Standard | 100,000 | 1.00 | $10 |
| Mini | 10,000 | 0.10 | $1 |
| Micro | 1,000 | 0.01 | $0.10 |
Most trading platforms let you type the size in lots, so 0.10 means one mini lot and 0.01 means one micro lot. You can usually choose sizes in between, such as 0.25 lots (25,000 units).
Why lot size matters
The lot size determines how much money each pip is worth. The bigger the position, the bigger the profit or loss for the same price move. This is why choosing a sensible size is one of the most important decisions in any trade.
Example: You buy EUR/USD and the price rises 30 pips. With 1 standard lot, that is roughly 30 x $10 = $300. With 1 mini lot, it is about 30 x $1 = $30. With 1 micro lot, it is about 30 x $0.10 = $3. The market move is identical; only the size changed.
The same scaling applies to losses. A 30-pip move against you would cost about $300 on a standard lot.
Matching size to your account
A common risk-management habit is to decide in advance how much of your account you are willing to lose on a single trade, then pick a lot size that keeps the loss within that limit if your stop-loss is hit.
Example: With a $2,000 account, you decide to risk no more than 1% ($20) per trade. Your stop-loss is 20 pips away on EUR/USD. That allows $1 per pip, which is about one mini lot (0.10). (Figures are illustrative, not a recommendation.)
Risk: Trading lot sizes that are too large for your account is one of the fastest ways to lose money. Smaller sizes, such as micro lots, let beginners learn with less at stake.
Key takeaways
- Standard lot = 100,000 units, mini = 10,000, micro = 1,000.
- On a platform, 1.00, 0.10 and 0.01 lots correspond to standard, mini and micro.
- Lot size sets the value of each pip, scaling both profits and losses.
- Choose size based on how much you are prepared to lose per trade.
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