What Is Lot Size (Forex)?
Forex lot sizes are standardized so traders can size positions consistently. A standard lot is 100,000 units of the base currency (the first ticker in the pair). A mini lot is 10,000 units; a micro lot is 1,000 units; a nano lot is 100 units. Each step is a factor of 10.
Pip values scale linearly with lot size. On EUR/USD, a standard lot makes one pip worth $10; a mini lot makes it $1; a micro lot makes it $0.10. Position sizing for risk management is mostly a question of how many micro lots can take a 30-pip stop without exceeding 1-2% account risk.
Retail brokers typically allow micro lots, which makes forex accessible at small account sizes. A $1,000 account trading 1 micro lot with a 20-pip stop risks $2 per trade — very manageable. Standard lots are typically used by accounts above $50,000.
Related terms
- Pip — Smallest standard price increment in a forex pair — typically 0.0001 (or 0.01 for JPY pairs).
- Forex
- Leverage — Borrowed capital used to increase trade size beyond what cash alone allows.
- Risk Management — The systematic process of identifying and controlling exposure to losses.