HOW DOES LOT SIZE EFFECT ON YOUR TRADING?

LOT SIZE AND LEVERAGE.

                                           

                                      

 

LEARN ABOUT LOT SIZE IN FOREX

 

 

INTRODUCTION OF LOT SIZE.

what size and contract size the contract size the trading volume for a phalanx transaction the lot size is a unit of measurement they're basically four different contract sizes let's have a look at each of them one nano lot equals 100 units of currency one micro lot equals 1,000 units of currency one mini lot equals 10,000 units of currency and one standard lot equals one hundred thousand units of currency from this slide you would have also noticed that one standard line equals ten mini Lots equals 10 micro Lots one micro lot equals 10 nano lots the unit of contract size is based on the base currency of the currency pair let's have a look at an example one mini lot equals ten thousand units of base currency if you want to trade one mini lot of euro dollar the base currency is the Euro and the volume is equivalent to ten thousand euros let's have a look at one more example one standard lot equals one hundred thousand units of the base currency if you would have trade one standard lot of the dollar yen the base currency is that US Dollars and the volume is equivalent to one hundred thousand US dollars

MORE ABOUT THE LOT SIZE.

lot size leverage and margin the lot size the leverage in the margin all work together when it comes down to the mathematical formulas but first let's take a look at each one separately and learn what they are a lot size a lot size is how you will determine what each pit you earn is worth when you place a trade you have to trade a little currency blocks or units these little blocks are called Lots a lock is a certain size of currency traded or a certain dollar amount there are three basic lot sizes there's the micro lot and that's $1,000 worth of currency controlled there's the mini lot that's $10,000 worth of the currency controlled and there is the standard lot and that is $100,000 worth of currency controlled what lot sizes are worth in the Euro USD 1 micro lot is worth 10 cents a pip 1 mini lot is worth $1 a pip and one standard lot is worth $10 a pip margin margin is a deposit required to open and to maintain open positions this is not a fee or a transaction cost it is simply a portion of your account equity set aside and allocated as a deposit to initiate the trade margin is multiplied by leverage to the terminal lot size now margin is real money from your trading account if you want to trade one micro lot not it's worth $1,000 and your broker is offering you fifty to one leverage in order to control that $1,000 micro lot you'll need twenty dollars of margin from your account so about 20 dollars of margin times that fifty to one leverage so $20 times fifty gives you $1,000 and that's one micro lot your broker will take the margin and segregate it during the trade you will get it back regardless if you win or lose your trade leverage because the market moves in such small amounts no one one hundredths of a cent we need to magnify the trade size in order to make any real money leverage is the trade size multiplier that means your broker lands you the additional capital although no money changes hands brokers can offer a wide range of leverage anywhere from ten to one to as much as five hundred to one us brokers are limited to offering you a maximum of fifty to one leverage