One of the first things that confused me in forex wasn’t the charts or the candles—it was those little numbers like 0.01, 0.1, or 1.0. At first, I thought they were just random decimals or maybe amounts of money. Later I realized: these are called lot sizes, and they decide how big your trades really are.
Understanding lot sizes is super important because they control how much money you risk and how much you can make. Let’s go step by step.
What is a Lot in Forex?
A lot in forex is simply the size of your trade—it tells you how many units of currency you’re buying or selling. Think of it like the packaging size in a store: do you want the small pack, the medium, or the jumbo size?
In forex, there are three common types of lots you’ll hear about: micro, mini, and standard.
Types of Lot Sizes
1. Micro Lot (0.01)
- Size: 1,000 units of currency.
- Example: If you trade 0.01 on EUR/USD, you’re trading €1,000 worth of euros.
- Best for: Beginners and people who want to risk very small amounts.
This was the first size I used because even if I was wrong, my losses were tiny.
2. Mini Lot (0.1)
- Size: 10,000 units of currency.
- Example: Trading 0.1 on EUR/USD means €10,000 worth of euros.
- Best for: Traders with a bit more experience who want higher rewards but can handle slightly bigger risks.
I remember stepping up to 0.1 and realizing how much faster profits and losses can move!
3. Standard Lot (1.0)
- Size: 100,000 units of currency.
- Example: Trading 1.0 on EUR/USD = €100,000 worth of euros.
- Best for: Experienced traders with bigger accounts.
This is the “pro level.” At this size, even a small move in price can make or lose you a lot of money.
Why Lot Size Matters
Lot size isn’t just a number—it decides how much each pip is worth:
- Micro lot (0.01) → 1 pip ≈ $0.10
- Mini lot (0.1) → 1 pip ≈ $1.00
- Standard lot (1.0) → 1 pip ≈ $10.00
👉 So if the market moves 50 pips:
- With 0.01, you’d gain or lose about $5.
- With 0.1, you’d gain or lose about $50.
- With 1.0, you’d gain or lose about $500.
Quick Visual Aid (where a diagram fits)
You could add a simple table or diagram showing:
| Lot Size | Units | Pip Value | Best For |
|---|---|---|---|
| 0.01 (Micro) | 1,000 | $0.10 per pip | Beginners |
| 0.1 (Mini) | 10,000 | $1.00 per pip | Intermediate |
| 1.0 (Standard) | 100,000 | $10.00 per pip | Experienced traders |
Final Thoughts
If you’re just starting, there’s no need to jump into standard lots. Micro and mini lots are perfect for learning and controlling your risk. As your skills (and account balance) grow, you can increase the size. But always remember: bigger lot = bigger risk.
For me, starting small with micro lots was the smartest choice—it gave me confidence without burning my account. That’s why understanding lot sizes early on can save you a lot of headaches later.
