A lot tells you how big a forex position is. Because currency moves are small, trades are sized in blocks of units rather than single units. Lot size, together with the stop distance in pips, determines how much money a trade can make or lose, and how much margin it ties up.
How it works
| Lot type | Units of base currency | Pip value (USD-quoted pair) |
|---|---|---|
| Standard | 100,000 | $10.00 |
| Mini | 10,000 | $1.00 |
| Micro | 1,000 | $0.10 |
| Nano | 100 | $0.01 |
Most platforms express size in decimals of a standard lot, so 0.10 is a mini lot and 0.01 a micro lot. Nano lots are offered only by some brokers. For metals, indices and CFDs, the contract size per lot differs; check the specifications.
Lot size = risk amount ÷ (stop distance in pips × pip value per standard lot)
Example
You have a $10,000 account, risk 1% per trade ($100), and plan a EUR/USD trade with a 25-pip stop.
- Pip value per standard lot = $10
- Lot size = 100 ÷ (25 × 10) = 0.40 lot (40,000 units)
If the stop is hit, the loss is about 25 × $4 = $100, plus spread and costs. If the target is 60 pips away, a full win would be about $240, a 1:2.4 risk/reward ratio.
The same trade at 1.00 lot would put $250 at risk, 2.5% of the account, for no change in the analysis.
Common mistakes
- Using a fixed lot size. One lot on a 10-pip stop and one lot on a 60-pip stop are very different risks. Size each trade from its stop.
- Confusing units and lots. 10,000 units is 0.10 lot, not 1 lot.
- Sizing by available leverage. The broker allowing a larger size does not make it appropriate.
- Forgetting cross-pair pip values. On pairs not quoted in your account currency, pip value per lot changes with the exchange rate.
The position size calculator and pip calculator do this math for any pair. See also the position sizing guide.
In SnapPulse
SnapPulse calculates position size on the device from your balance, risk percentage and the stop distance of each scanned setup. Download SnapPulse.
Educational content — not financial advice.
Updated