A common question for newbies to Forex trading is how much in one lot? Many brokers throw this word around and to a new trader it sounds a bit strange.
Below is a breakdown on what this term means depending on what you are trading, this is broken down into three categories when it comes to lot’s, first one being the standard lot, the second one being the mini lot and the last one being the micro lot. Each one risks a certain amount depending on the leverage one uses.
100,000 units or $100,000 in that currency
One example of this is a $10,000 dollar trade with x10 leverage.
Second example is a $1000 dollar trade with x100 leverage
$10 dollars per pip
10,000 units or $10,000 in that currency
One example of this is a $1000 dollar trade with x10 leverage
Second example of this is $100 dollars trade with x100 leverage.
$1 per pip
Recommended for those new to Forex, this is 1,000 units or $1,000 in that currency
One example of this is a $100 dollar trade with x10 leverage
Second example of this is a $10 dollar trade with x100 leverage
$0.10 per pip
Be aware that by trading micro lots does in no way limit potential for lucrative gain, instead it allows a trader to go for more pips with each trade making more pips which in turn teaches the hard art of Forex. Trading micro lots therefore is priceless for a starter to this type of business. Hey I trade micro lots and I happen to make more than $10 dollars per trade sometimes. Build the success before risking more.
I hope that helps you out on the value of a lot, some Forex providers such as Oanda allow a trader to choose the exact unit amount they desire, this can be from 1 unit, all the way to tens of thousands to hundreds of thousands of units. That is up to, just dot down the unit amount each trade you place.