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A ‘lot’ is the measurement of volume (size of the position).

1 standard lot is equivalent to a volume of 100,000 ‘units’ having been traded. 

1 unit of GBP:USD is equivalent to £1.
100,000 units (1 standard lot) of GBP:USD is equivalent to £100,000.

1 unit of EUR:JPY is equivalent to 1.
100,000 units (1 standard lot) of EUR:JPY is equivalent to €100,000.

1 unit of USD:CHF is equivalent to $1.
100,000 units (1 standard lot) of USD:CHF is equivalent to $100,000.

and so on…

Different volumes traded are denoted by different ‘lot’ sizes, called ‘standard’, ‘mini’ and ‘micro’. Let’s have a look at how many units they respectively represent, below:

MT4 ‘lot’ size

Number of ‘Units’

Known as

1.0

100,000

Standard Lot

0.10

10,000

Mini Lot

0.01

1,000

Micro Lot

This is what volume looks like in your trading platform. Where 1.00 denoted 1 standard lot.

forex lot

You are able to open and close different size positions, therefore manipulating your risk/exposure to the market and its movement.

Let’s have a look at an example, below.

 

EXAMPLE 1

A trader opens a long position of EUR:USD with a volume of 1 standard lot

The trader later closes 0.4 standard lots (4 mini lots) from their open position.

Therefore, the trader now has 0.6 standard lots (6 mini lots) of their original position left open.

LESSON SUMMARY:

– A ‘lot’ is the measurement of volume.

– 1 ‘standard lot’ is equivalent to a volume of 100,000 ‘units’ 

– 1 ‘mini lot’ is equivalent to a volume of 10,000 ‘units’.

– 1 ‘micro lot’ is equivalent to a volume of 1,000 ‘units’.

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