A lot references the smallest available trade size that you can place when trading currency pairs in the foreign exchange market.
Currencies are traded inlots, which are batches of currency used to standardize the quantity for forex trades.
Astandard lotis 100,000 units of currency. There are also smaller sizes available, known asmini lotsandmicro lots, worth 10,000 and 1000 units respectively.
| LOT | NUMBER OF UNITS |
| Standard | 100,000 |
| Mini | 10,000 |
| Micro | 1,000 |
In the past, spot forex has been traded in lots of 100, 1,000, 10,000 or 100,000 units
Most forex brokers will refer to lots by increments of 1,000(micro lot).
Understanding a Micro Lot
A micro lot represents 1,000 units of any currency.
A one-pip movement for a micro lot corresponds with a $0.10 change.
For example, if you buy $1,000 against the Japanese yen at a rate of ¥109.00.
The exchange rate moves to ¥109.50, which means USD/JPY moved 50 pips.
You have made a profit of$5.
50 pips x $0.10 = $5
If the exchange rate falls 50 pips to ¥108.50 you will have a loss of $5.
Here are examples of pip values for EUR/USD and USD/JPY, depending on lot size.
| PAIR | CLOSE PRICE | PIP VALUE PER: | ||||
|---|---|---|---|---|---|---|
| Unit | Standard lot | Mini lot | Micro lot | Nano lot | ||
| EUR/USD | Any | $0.0001 | $10 | $1 | $0.1 | $0.01 |
| USD/JPY | 1 USD = 80 JPY | $0.000125 | $12.5 | $1.25 | $0.125 | $0.0125 |
In the interbank market, where banks trades with each other on online electronic platforms, the standard trading size, or standard lot, is 1 million units in the base currency. A “buck” is one million units of a dollar-based currency pair. A “yard” is 1 billion units.
