TRADING BASICS

PRESENTED BY

TRADERA
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TRADING TERMINOLOGY

LOT SIZES

In trading, the term “lot size” is used to describe just how much of an asset you are trading

at any given time. We have broken down the various lot size descriptions below:

Y Standard Lot (1.0) = 100,000 units of currency. In general, each pip gained or lost

when trading a standard lot is equivalent to $10.

Y Mini Lot (0.1) = 10,000 units of currency. In general, each pip gained or lost when

trading a mini lot is equivalent to $1.

Y Micro Lot (0.01) = 1,000 units of currency. In general, each pip gained or lost when

trading a micro lot is equivalent to $0.10.

There will be instances where the financial gain or loss for a given pip isn’t exactly that

amount, but this information is a good rule of thumb to remember and will be applicable to

most currency pairings that you’ll be working with. You should now take a mental note that

there are two significant factors that determine the financial outcome of any trade that you

take: your lot size + the amount of pips that price moves for or against you.
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In general, we strongly discourage over-leveraging your account. Over-leveraging is a term

that refers to using too high of a lot size for the amount of equity in your trade account. We

have constructed a risk management cheat sheet which can act as a startup guide to help

you determine what lot size is appropriate for you. Please refer to the section “What lot size

should I use?” to further review that information.

Note that the information provided on our risk management cheat sheet is purely a reference

point for starting out. Here are some things that will affect the values provided:

Y Your Account Equity

Y Your Trading Goals

Y Your Risk Appetite

Y Your Strategy Type

Y Your Trading Style (Swing vs Intraday vs Scalp)

Y Your Experience / Skill

Y Your Trading Psychology