Trading Sizes (Lot)

In the last video, we discussed how leverage is used to trade on a margin. That would make sense given that currency pairs are traded in fixed contract sizes. The standard size is called “a lot” and is equal to 100,000 units of the base currency.

For example, a lot in USD/JPY would be worth 100,000 USD, because in this pair the USD is the base currency, while a lot in GBP/USD is worth 100,000 GBP, because in this case the GBP is the base currency, as is the EUR in EUR/USD, hence a lot in EUR/USD would be worth 100,00 EUR.

However, there are subdivisions of the standard size. There is the mini lot, which is equal to one tenth of the lot, i.e. 10,000 of the base currency and there is also the micro lot, which is equal to one hundredth of a lot, i.e. 1000 units of the base currency.