Getting to Know Lot in Forex Trading
The trading world that is increasingly in demand has a variety of terms that need to be learned to be able to use them well. One of the terms that is often and important used is lot. A lot is the standard unit of measure for position volume, which is a fixed amount of the base currency in the forex market. This term is a component and basic term in forex trading. The standard size for lots is 100,000 units, but there are also mini (10,000), macro (1,000) and nano (100) sizes.
The size of the lot will determine the size of the transaction that can be carried out in the forex market. If the number of lots is large, then the capital or equity owned must be large and the profit or risk of loss is also large. In general, brokerage companies will provide regular account and mini-account services, and every sale and purchase transaction. The easiest way to calculate lot values is to use a calculator. This calculation is important for optimizing the volume of positions in relation to the deposit amount taking into account the risks, as well as balancing trades. In addition, the selection of the right lot and the placement of increased positions will make it possible to choose the trading mode.
The number of lots or called the position size has two sides. A large position size can provide multiple benefits, but it can also cause painful losses. Multiple profits can come if the position taken is in the direction of the market movement, but losses can occur if the position is taken against the direction of market movement.
Lot Types in Other Markets
In other markets, the definition of a lot may vary, here are some of the types:
1. Binary options. Done to predict price movements in one direction or another.
2. Stock market, the approach to the lot terminology is different in the stock market, because stock prices can be in corridors ranging from a few cents to thousands of US dollars.
3. The derivatives market, the approach to determining lots and calculating volume, is even more complicated. The price step shown shows the specifications, stop loss, risk level, and the result obtained is expressed in the number of contacts.
Comments
Post a Comment