Position size in trading is one of the most important things. Unfortunately, beginner traders very often neglect this segment of trading.
1,000 Units = 0.01 Lot.
What does 0.01 in forex mean?
0.01 lot size in forex or micro lot equals 1.000 units of any given currency. So position size of 0.01 lot for EURUSD currency pair, for every ten pips gain will provide a $1 profit (10 cents per pip). So for EURUSD means that ten pips for 0.01 lot size profit are $1.
0.01 lot size or 1000 units or micro lot is the smallest position size for standard forex accounts.
The standard lot size forex is one lot, and it is equal to 100 000 units or $10 per pip gain.
Below you can see a Table of 3 types of position sizes:
Types of lot size:
- Standard Lot
Lot size chart forex
The lot size chart in forex represents lot size, units, and $ per pip. As we can see, a below-standard lot has 100,000 units, mini lot 10,000, micro-lot 1000, nano 100 units.
In the video below is a detailed explanation from our FXIGOR youtube channel:
This methodology can be extended further.
For example, what is a 1.00 lot in forex?
1.00 lot is a measurement of currency units that traders will buy or sell during the trading, and the standard size for a lot is 100,000 units. So, for example, if traders trade EURUSD, ten pips gain for one lot size can generate a profit of $100.
Micro lot forex
Micro lot forex size represents 1000 trading units or 0.01 lot size and the smallest block of currency a forex trader can trade. In that case, 0.01 lot size profit is $1 for every 10 pips moving toward a trading position. So, for example, if a trader trades 1 micro lot (0.01 lot) and buys EURUSD at 1.2340 if the price hits the target of 1.2350, the profit will be $1.
Mini lot forex
Mini lot forex size represents 10.000 trading units or 0.1 lot size, and it is the usually most common lot size in forex mini accounts that beginners traders use. In that case, 0.1 lot size profit is $10 for every 10 pips moving toward a trading position. So, for example, if a trader trades 1 mini lot (0.1 lot) and buys EURUSD at 1.2340 if the price hits the target of 1.2350, the profit will be $10.
Standard lot forex
Standard lot forex size represents 100.000 trading units or 1 lot size, and it is the standard size in forex trading accounts that professional traders use. In that case, 1 lot size profit is $100 for every 10 pips moving toward a trading position. So, for example, if a trader trades 1 lot and buys EURUSD at 1.2340 if the price hits the target of 1.2350, the profit will be $100.
Now the most important question:
What lot size to use in forex?
You need to use a properly defined lot size based on your available portfolio balance, risk preference, past performance. Forex lot size can be calculated using input values such as account balance, risk percentage, and stop loss. In the first step, the trader needs to define a risk percentage for trade and stop loss and a dollar per pip. In the last step, a trader needs to determine lot size (number of units) for currency pairs.
Read more in our article: How to calculate lot size in forex?