What is a lot in forex? How is Lot Calculated?

One of the terms we will come across a lot in financial markets is lot. Lot appears in the dictionary as “to divide, to share”. In Forex, the lot is the unit used to express the trade size. The size of the position opened in the transactions is determined by the lot. In other words, when opening a transaction, we open a transaction on lots, not on random numbers. Lot does not have the same value for every instrument, meaning it differs from product to product. So how much is 1 lot?

How Much is 1 Lot in Forex ?

After learning what a lot is, we should look at how much is 1 lot. If you are trading in Forex, 1 lot means 100,000 units. This is the answer to the question of how much is 1 lot for forex. In other words, when you open a 1 lot trade, you are purchasing 100,000 units from the relevant parity.

How Much is Lot in Financial Products?

The answer to the question of how much is 1 lot was 100,000 units in parities. Of course, the lots of other financial products are also important for your transactions. Commodities such as gold, silver and oil. So how much is 1 lot of these products?

When expressing precious metals in financial markets, “X” is placed at the beginning of the abbreviation. If we think about gold; While the symbol of gold is “AU”, it is expressed as XAU in the markets. So how much is 1 lot of gold? 1 lot of gold is equivalent to 100 units. 1 lot is 100 ounces as it is calculated over ounces of gold. An ounce corresponds to 31.10 grams.

How much is 1 lot of silver? 1 lot of silver costs 5000 ounces. 1 lot of oil is equivalent to 100 barrels. In natural gas, 1 lot is equivalent to 100,000 cubic meters.

What are Forex Lot Types?

Lot comes in different types. Concepts such as micro lots and mini lots have also been created so that investors can trade in the investment instruments they want and invest in small amounts. That is, it is divided into sub-units. Now let’s see these units:

Standard lot: A lot where 1 lot is equivalent to 100,000 units. In Forex, lot values ​​differ according to investment instruments. In parities, this value is 100,000 units.

Mini lot: It is the type of lot that corresponds to 10 to 1, that is, 10 percent of the standard lot amount. Considering that the standard lot is 100,000, 1 mini lot is equivalent to 10,000 units. For example, if you open a 1 mini lot (0.1 lot) trade in EURJPY parity, you will open a 10,000 Euro trade. Considering that your leverage is 100; With a guarantee of 10.000 / 100 = 100 euros, you will enter into a transaction of 10.000 euros.

Micro lot: Micro lot is equal to 1 percent of the lot. That is 1000 units. It shows up as 0.01. Again, if we open 1 micro lot trade in EURJPY, we will get 1000 Euros. If we look at 100 leverage; With 1000 / 100 = 10 Euros, you enter a 1000 Euro transaction.

Nano lot: Nano lot is not a type used in every forex company. You can come across forex companies that offer nano accounts. In forex companies that open a nano account, also known as a cent account, you can open an account and start trading with small collateral amounts such as 10 – 50 dollars. The purpose of this account is not to make a profit. The purpose of this account is to gain experience, try out their strategies, try and evaluate the company, test robots. Because small amounts are deposited and small transactions are made, even if it is lost, it is in very small amounts. So what is the nano lot used in these account types?

Nano lot is equivalent to 100 units. In other words, if you are trading on a nano lot in a parity, you will have entered 100 units in your purchase of 1 lot. If we look at the EURJPY parity; In your 1 lot trade, you will open a 100 Euro position. If you have 100 leverage, you can open a 100 euro trade with 100 / 100 = 1 euro, that is, 1 euro collateral.

How is Lot Calculated?

In order to perform the lot calculation process, the pip movements occurring in the values ​​of the invested products should be followed. Therefore, it is necessary to know what a pip is and how it is calculated. The decreases and increases in the prices of the products determine how much profit or loss you will make in the transaction you make on that product. In addition, these price changes are important in the calculation of the lot. If we go through the example:

For clarity, it makes sense to give an example over EURUSD, one of the parities with the highest trading volume. Now it is 1.1370 of this pair. If we think this pair will go up, we can trade here. When we buy 1 lot at the price we have specified, we get 1.1370 X 100,000 = 113,700 dollars Euro. So 113,700 euros is equivalent to 113,700 dollars. The example we gave is an example given on a 1:1 leverage. So we can say that there is no leverage. Of course, leverage will come into play as we trade in forex. In this way, our guarantee amount will be determined.

Well, if we trade on mini lot on the same parity; It should be noted that the mini lot is 0.1 lot and it corresponds to 10,000 units. Now, if we open a trade with a mini lot; 1.1370 X 10.000 = $11.370 we enter the transaction.

If we are going to trade on micro lots, we will buy 1000 units. So we will buy with a value of 0.01. 1.1370 X 1000 = open $1137 trade

SEE ALSO; Favorite Parities of the Forex Market!

Share this article

Leave a Reply

Your email address will not be published. Required fields are marked *