What is lot size in Forex?

[TOZZIBLINKZ]

In the forex market, a lot refers to the standard unit of measurement for a trade. The term "lot" is short for "foreign exchange lot." A standard lot is the equivalent of 100,000 units of the base currency in a forex trade. However, not all traders have the capital to trade standard lots, and therefore, many brokers offer the option of trading mini lots and micro lots, which are smaller units of a standard lot. A mini lot is equal to 10,000 units of the base currency, and a micro lot is equal to 1,000 units of the base currency. The lot size you choose to trade can have a significant impact on the overall risk of your trade. Trading a larger lot size will increase the potential returns, but it will also increase the potential losses. Therefore, it's important to choose a lot size that is appropriate for your account size and risk tolerance.

It's also important to note that the lot size you choose will also affect the amount of margin required to open a trade. Margin is the amount of money that needs to be deposited in your account as collateral for the trade. Therefore, a larger lot size will require more margin, which can be a significant factor to consider when choosing the lot size for your trade.

 

[Mary Frederick]

Don’t increase your lot size in trading because it will carry large amount of risk for you. Select such an ECN broker that meets your trading requirements and allows you with high security of funding. Eurotrader is a regulated ECN broker that allow traders with high security of funding.