Forex exchange trade obtains a wide variety of components that work in collaboration with each other so that the Forex world can operate without any problem. And Lot is one of those components.
Yet, there are many questions that may arise in a trader’s mind who is new to the FX world. For instance,
What does it refer to? What role does it play in the FX world? And most importantly, how does it relate to income generation?
You are going to get answers to all such questions by doing just a simple and easy task: staying in tune with us till the end. So, let’s start
All you need to know about a lot in forex
What is a lot in forex?
In the forex trading world, Lot refers to the measurement of the transaction amount. Hence, it represents the trade size or the sum of money that a trader is willing to trade at any given time.
In addition, lot size has a direct impact on the number of risks traders take while entering into the trades
Types of Lot in forex
There are four significant types of lots in forex. Let’s look at each one by one.
The standard Lot
Standard Lot is always equal to 1 lac (100,000) units of the base currency
The mini Lot
Mini Lot refers to the 10 percent of the standard Lot or 10 thousand units of the base currency.
The micro Lot
As its name represents, a micro lot is 1000 units of the base currency of 1 percent of the standard Lot.
The nano lot
Nano lot is equal to 0.1 percent of the standard Lot or 1,000 units of the base currency
How to calculate lot size in forex – why is it crucial
Each and every type of asset in forex trade is made in the account currency. However, it is USD in most cases. Therefore, it is very important for a trader to understand how much amount they will have reserved in USD when opening a position.
Hence, the calculation of lot size helps to build a balanced trading system. Now, how do you calculate it? There are a vast number of calculators available online for this purpose. All you have to do is do a little bit of investigation.
An important thing to remember.
Although you now know all the essentials of Lot in forex, there still is one thing to remember. And that is choosing the right brokerage house.
Collaborating with an efficient brokerage house can save you from various scam risks. There are many options available for this purpose. Yet we suggest choosing XM brokers. The best thing about this brokerage house is their demo account, through which you can practice trading without any worries. And once you are confident enough to put your own money at risk, you can register for XM live account.
A lot in forex refers to the measurement of transaction accounts. There are four types of forex lots that we have mentioned above in the article. So make sure you read the content thoroughly.