The Importance of Lot Size in Trading
Lot is a standard unit for every forex transaction that a trader makes. Some traders refer to lots as quantity. Understanding the lot in trading needs to be studied because it will really help traders in making transactions. The lot size will determine the size of the transaction in the forex market. If the capital owned by the trader is large enough, then the trader can carry out forex trading transactions using a large number of lots. However, traders need to remember that the risk of loss is also large, although of course it is followed by a greater opportunity to make a profit.
In forex, the number of units in one standard lot is 100,000 units of the base currency. If the base currency used is US dollars, it can be said that 1 lot is a nominal consisting of $100,000. However, apart from standard lots, there are also mini lots, micro lots, and nano lots. The following is the order of the number of units:
1 standard lot = $100,000
1 mini lot = $10,000
1 micro lot = $1,000
1 lot nano = $100
Why should the lot size be considered?
The lot size is of course very important and must be considered for people who are in the world of forex trading. And the basic rules when a trader wants to learn lots in are:
Lot
Lot is the smallest unit that can be used in forex trading transactions. This means that if you want to trade using a larger lot size, you will need a larger margin.
Number of Lot
The number of lots traded will greatly affect the amount of profit or loss obtained from trading transactions. The larger the number of lots, of course, the trader can get a bigger profit. However, it must still be considered how the risk of automatic loss is also getting bigger.
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