What Is A LOT in Forex Trading - Lot Sizes Explained

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What is a LOT in Forex Trading?

- Lot Sizes Explained
Updated Aug 03 2021
Trading Guides Forex What is a LOT in Forex Trading? - Lot Sizes Explained
A LOT is a measure to efficiently communicate standardized quantities of

Simplified Financial
currency transactions, it's far easier to say “1 LOT” than saying “One hundred
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A Standard LOT in Forex Trading equals to 100.000 units of any given currency.
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For example, 1 Standard LOT of EUR/USD equals to €100.000.
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Other lot sizes commonly used are:
Mini LOT (also referred as 0.1 lot) - 10.000 units of any given currency.
Micro LOT (also referred as 0.01 lot) - 1.000 units of any given currency.
Nano LOT (also referred as 0.001 lot) - 100 units of any given currency.
The objective of using this terminology is to facilitate communication and reduce
errors when conducting Forex transactions. Here's what you'll learn in this guide:
Author
PIP Value per Lot Size
Stefano Treviso
PIP Value per Lot Size Formula
PIP Value per Lot Size Example
Standard Lot in Forex
PIP Value per Standard Lot
Mini Lot in Forex
PIP Value per Mini Lot
Micro Lot in Forex

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PIP Value per Micro Lot
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A PIP is the smallest price measurement change in a currency trading. In the
case of EUR/USD a PIP is worth 0.0001, in the case of USD/JPY a PIP is worth
0.01.
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If EUR/USD is trading at 1.1456 and prices change to 1.1457 we can say that
it moved 1 PIP. By using TheTradingBible.com's website you agree to the use of cookies. Got it! 1
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If USD/JPY is trading at 114.22 and prices change to 114.23 we can say that it Your Capital is at risk.
moved 1 PIP.
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The objective of using PIP values per Lot is to determine: 77% of retail CFD accounts lose money.
How much money are we profiting or losing per each PIP that our trade moves
3
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taking into account the quantity of currency that we chose to trade with. 72% of retail CFD accounts lose money.
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In the form of a question it’s the same as if you asked yourself: if I go long on
EUR/USD with 5 Lots (€500.000), how much money am i profiting or losing every
time EUR/USD changes 0.0001 in price?
The PIP value per LOT size answers this question and does so with a result
expressed using the base currency, then you can convert it into whatever
currency you desire.
PIP Value per Lot Size Formula
The first part of the formula is doing a simple currency conversion, we are
dividing our PIP value according to the pair we trade (0.0001 or 0.01) by the
current exchange rate, that way we know how much is that PIP worth in terms of
the currency we are trading.
The second part is multiplying that result by the LOT size we are trading
(100.000, 10.000, 1.000, 100) to understand the impact of that previous
number we determined in the total amount of currency units we are trading
with.
PIP Value per Lot Size Example
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Let’s create an example together, we’ll use 1 Mini LOT of USD/JPY. Got it!
1 Mini Lot ( also referred to as 0.1 Lot) equals 10.000 units of currency.
Our Base currency in USD/JPY is the USD, so this transaction is for $10.000
worth of Japanese Yens.
The current value for USD/JPY is 103.84
Formula execution goes as follows: ( 0.01/103.84)*10.000 and the result is
$0.96, that is the PIP value for our Mini Lot (0.1 Lot) sized trade.
This means that for each PIP that the USD/JPY pair moves (0.01 in price change)
then we’re either profiting or losing $0.96.
Important:
In the example above, the Base currency was USD, so the result of our formula
is of course in USD.
If you were to run the formula on a pair where the Base currency was EUR then
the result of the formula is expressed in EUR, so if you want to handle all your
calculations in USD then converting the result is as simple as multiplying the

result of your formula by the EUR/USD exchange rate at the moment, and then
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When the Quote currency is the USD, these calculations are usually not
necessary as you’ll always arrive at the same results for the PIP per Lot size
value when you perform the conversion of your formula’s result into U.S Dollars.
Here are two Examples:
PIP value in a standard lot of EUR/USD - Current Trading price 1.2227 - Let’s
apply our formula:
(0.0001/1.2227)*100.000 = 8.1786 (this result is in EUR, our base currency)
Converting the result of our formula to US Dollars by multiplying our result by
the current EUR/USD exchange rate
8.1786 * 1.2227 = $10
PIP value in a standard lot of GBP/USD - Current Trading price 1.3469 - Let’s
apply our formula:

(0.0001/1.3469)*100.000 = 7.4244 (this result is in GBP, our base currency)
Converting the result of our formula to US Dollars by multiplying our result by
the current GBP/USD exchange rate
Converting the result to US Dollars: 7.4244 * 1.3469 = $10
Now you know, we always arrive at the same final result when the quote
currency is the US Dollar.
Standard Lot in Forex
A standard lot size equals 100.000 units of any given currency. Usually this trade
size is already considered big and requires a lot of care when calculating the pip
value. Let’s look at some examples:
1 LOT OF EUR/USD equals to a €100.000 purchase worth of U.S Dollars
1 LOT OF USD/JPY equals to a $100.000 purchase worth of Japanese Yens
PIP Value per Standard Lot

In any currency pair where the USD is the quote (the second currency) the PIP
value per Standard lot is $10
For any other case, apply the formula we explained earlier and you’ll get the
result expressed in the currency of the base unit.
If your base currency was the US Dollar, then you already got your result
expressed in US Dollars. If your base currency was any other, you can convert
the result of your formula to any other currency you choose.
Mini Lot in Forex
A Mini LOT size equals 10.000 units of any given currency. A Mini lot can also be
referred to as 0.1 Lot. Here are some examples:
1 Mini LOT of EUR/USD equals to a €10.000 purchase worth of U.S Dollars

0.1 LOT of USD/JPY equals to a $10.000 purchase worth of Japanese Yens
PIP Value per Mini Lot
value per Mini lot is $1
Micro Lot in Forex

A Micro LOT size equals 1000 units of any given currency. A Micro lot can also be
1 Micro LOT of EUR/USD equals to a €1000 purchase worth of U.S Dollars
0.01 LOT of USD/JPY equals to a $1000 purchase worth of Japanese Yens
PIP Value per Micro Lot
value per Micro lot is $0.1
expressed in US Dollars. If your

By base currency was any
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Nano Lot in Forex
A Nano LOT size equals 100 units of any given currency. A Nano lot can also be
1 Nano LOT of EUR/USD equals to a €100 purchase worth of U.S Dollars
0.001 LOT of USD/JPY equals to a $100 purchase worth of Japanese Yens
PIP Value per Nano Lot
Conclusion
Knowing the different lot sizes available and how to calculate the pip per lot size
value, will allow you to develop efficient risk management plans when trading.
If you know that any given currency fluctuates 100 PIPS per day and your risk
management plan fits a max daily loss of $100 then you wouldn’t open a
Standard lot trade, right? That would expose you to a huge profit/loss potential
outside your risk management plan.
This is the mistake that many new traders make due to brokers providing high
leverage factors to all their clients, when a a newbie trader sees that he can open
a position worth $100.000 (1 standard lot) using $100 as margin requirement,
just because he cans he does so and this couldn’t be more wrong, remember to
always fit every single trade in your risk management plan.

When researching to write this article we noticed that other websites focus on
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Good luck!
Frequently Asked Questions
How much is 0.1 Lot Size in Forex?
0.1 Lots in Forex equals to 10.000 currency units, which is also called a Mini Lot.
To achieve this result all you need to do is multiply 0.1 by 100.000 (the standard
lot value).
0.01 Lots in Forex equals to 1.000 currency units, which is also called a Micro
Lot. To achieve this result all you need to do is multiply 0.01 by 100.000 (the
standard lot value).
0.001 Lots in Forex equals to 100 currency units, which is also called a Nano Lot.
To achieve this result all you need to do is multiply 0.001 by 100.000 (the
standard lot value).
How much is 100 Lots in Forex?
100 Lots in Forex amounts to 10.000.000 currency units. To achieve this result
you need to multiply 100 by 100.000 (the standard lot value).
USD/JPY Lot Size

Since Lots are always expressed on the base currency (the first one) and we
know that a standard lot isCompare

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a standard
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lot of USD/JPY is equivalent to $100.000 worth of Japanese Yens.
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What is a LOT in Forex Trading?

A LOT is a measure to efficiently communicate standardized quantities of

Other lot sizes commonly used are:

The objective of using this terminology is to facilitate communication and reduce

PIP Value per Lot Size Example

Standard Lot in Forex

PIP Value per Standard Lot

Mini Lot in Forex

PIP Value per Mini Lot

Micro Lot in Forex

How and Where to Buy Tesla

PIP Value per Lot Size Shares Online?

Bitcoin Explained - The Only

Guide you’ll Ever Need

How to Buy Stocks - A

Beginners Step-by-Step Guide

A PIP is the smallest price measurement change in a currency trading. In the

time EUR/USD changes 0.0001 in price?

currency you desire.

PIP Value per Lot Size Formula

the currency we are trading.

(100.000, 10.000, 1.000, 100) to understand the impact of that previous

number we determined in the total amount of currency units we are trading

PIP Value per Lot Size Example

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worth of Japanese Yens.

The current value for USD/JPY is 103.84

Formula execution goes as follows: ( 0.01/103.84)*10.000 and the result is

then we’re either profiting or losing $0.96.

calculations in USD then converting the result is as simple as multiplying the

Here are two Examples:

apply our formula:

(0.0001/1.2227)*100.000 = 8.1786 (this result is in EUR, our base currency)

Converting the result of our formula to US Dollars by multiplying our result by

the current EUR/USD exchange rate

8.1786 * 1.2227 = $10

apply our formula:

Converting the result to US Dollars: 7.4244 * 1.3469 = $10

currency is the US Dollar.

Standard Lot in Forex

value. Let’s look at some examples:

1 LOT OF EUR/USD equals to a €100.000 purchase worth of U.S Dollars

1 LOT OF USD/JPY equals to a $100.000 purchase worth of Japanese Yens

PIP Value per Standard Lot

value per Standard lot is $10

result expressed in the currency of the base unit.

the result of your formula to any other currency you choose.

Mini Lot in Forex

referred to as 0.1 Lot. Here are some examples:

1 Mini LOT of EUR/USD equals to a €10.000 purchase worth of U.S Dollars

PIP Value per Mini Lot

value per Mini lot is $1

result expressed in the currency of the base unit.

the result of your formula to any other currency you choose.

Micro Lot in Forex

1 Micro LOT of EUR/USD equals to a €1000 purchase worth of U.S Dollars

0.01 LOT of USD/JPY equals to a $1000 purchase worth of Japanese Yens

PIP Value per Micro Lot

value per Micro lot is $0.1

result expressed in the currency of the base unit.

expressed in US Dollars. If your