What is a lot?
A lot is a standard trade size. Platforms such as MetaTrader ask for your trade "volume" in lots.
| Volume on platform | Name | Units of base currency |
|---|---|---|
| 1.00 | Standard lot | 100,000 |
| 0.10 | Mini lot | 10,000 |
| 0.01 | Micro lot | 1,000 |
You can usually trade in steps of 0.01 lots, for example 0.03 or 0.25.
Why lot size matters more than anything else
The lot size decides the money value of every pip:
- 1.00 lot of EUR/USD: about $10 per pip
- 0.10 lot: about $1 per pip
- 0.01 lot: about $0.10 per pip
Two traders can take exactly the same trade idea. One risks $3 and the other risks $300, purely because of lot size.
Lots and leverage
Leverage lets you open lots that are much larger than your deposit. With $200 and high leverage, a platform may let you open a full standard lot, where a 20-pip move equals your whole account. Just because the platform allows a size does not make it sensible.
Other instruments
Contract sizes differ for gold, indices and other CFDs. For example, one lot of gold (XAU/USD) is commonly 100 troy ounces, but this varies by broker. Always check the contract specification on your platform.