How it works
Forex is traded in multiples of fixed units. The lot you choose decides how much each pip movement is worth in real money. Bigger lot means bigger pip value, bigger pip value means bigger profit and bigger loss for the same price move.
The four standard sizes
- Standard lot: 100,000 units. One pip on EUR/USD is worth about $10.
- Mini lot: 10,000 units. One pip is worth about $1.
- Micro lot: 1,000 units. One pip is worth about $0.10.
- Nano lot: 100 units. One pip is worth about $0.01. Useful for paper-trading discipline checks.
Example
You have a $5,000 account and want to risk 1% ($50) on a EUR/USD trade with a 25-pip stop. At $2 per pip you stay inside the risk budget. $2 per pip equals two mini lots (20,000 units). Standard lot at $10 per pip would blow the budget five times over.
Why it matters
Lot size is how you translate a percentage risk rule into a position. Without sizing to lot, every trade is a coin flip on account survival.
