Forex lot sizes – micro, mini, and standard lots

Currencies are traded in units grouped into lots. At the retail level, they are divided into several categories: so-called trade-size or standard lots, mini lots, and micro-lots.

A standard lot is made up of 100,000 units of whatever the base currency of a pair is. A mini lot consists of 10,000 units of the base currency and a micro lot of 1,000 units. A mini-batch is one-tenth of a standard batch’s size, while the micro-batch is one-tenth of the mini-batch.

Example

when buying a micro lot in GBP/USD, we can buy 1,000 pounds sterling and sell an equivalent amount of dollars.

Suppose the current GBP/USD exchange rate is 2.4500, and you want to buy $10,000 of this pair. The formula would look like this:

Size of the desired position / current exchange rate = number of units.

That is: #100,000/2.4500 = 40,816.32 units of GBP/USD.

USD as a base currency

Buying a pair that contains the USD as the base currency is much easier to calculate. Why? Because in these cases, it is enough to purchase the number of units you want, since we are buying dollars as this is the base currency of the pair.

In the case of a cross pair transaction, if we want to buy $100,000 in the GBP/CHF pair, we will buy 40,816.32 units of GBP/USD at the above exchange rate, and we will sell 100,000 units of USD/CHF.

Choosing between several lot sizes is a great advantage that retail Forex trading offers the small investor. It allows you to better adjust and tailor money management to better suit your trading style.

If you have a small account, you can keep your risk profile low by trading mini lots. Even the most experienced traders avoid standard lots to be more precise in setting their position sizes.