Many people that are just starting on the currency exchange market have questions when it comes to opening a position with an online forex broker. One of the FAQs is What is the highest lot size in forex trading.
This article will help you better grasp what lots are and how to apply the result of your position calculations to open a trade with your broker.
Lot sizes on Forex
There are generally four lot sizes that you will come across when trading in the forex market.
- Standard lot – 100,000 currency units
The Standard Lot is what you will see most often when trading with the standard account types of many Forex brokers. The standard lot is 100,000 currency units.
If your account is denominated in euros, a standard lot will then represent 100,000 €. The leverage available from many brokers makes it possible to obtain a lot for a lesser amount. However, this is not within reach of all budgets!
- Mini lot – 10,000 currency units
A forex mini lot is an excellent choice for those who wish to trade with lower leverage or even no leverage at all.
- Micro lot – 1,000 currency units
A micro lot in the forex market is the next step on the trading ladder.
- Nano lot – 100 units
The smallest commercial lot size available is the nano lot.
- Mini lot: 0.1 of a standard lot
- Micro lot: 0.01 of a standard lot
- Nano lot: 0.001 of a standard lot
The micro and nano lot are not always available from all brokers. Still, more and more brokers are giving the option of using the smallest lot units.
How to work out Lot Size Forex
A ”lot” is the smallest available trade size that you can place when trading currency pairs in the Forex market.
Typically, brokers offer to split the lot, so they can invest in smaller amounts. It is crucial to understand that the lot size has a direct impact. It indicates the level of risk you are taking.
The size of the trading lot has a direct bearing on how a market movement affects your accounts. For example, a 100 point move on a small trade will not feel the same as a 100 point move on a very large trade.
Finding the best lot size using a tool like Forex profit calculator can help you determine how many lots to take based on your budget.
This calculator will allow you, in particular, to find the number of lots to engage in the market according to the risk you want to take on each position (how much you are ready to lose at most if the trade loses).
The calculation is made according to the level of the protection stop that you set.
The result that the position calculator will provide will be expressed in euros, especially in the case of many lots. In its simplest form, the currency lot is a measure of currency units and a way to determine how many currency units are needed for a transaction.
Example of lot calculation
To make the above explanations even clearer, here is how the lot calculation works. Take the example with the most common pair in Forex, EUR/USD. The Euro is, therefore, the base currency.
- Let’s assume that a trader buys a standard EUR/USD lot at 1.1720, it means buying 100,000 EUR, which is a value of 1.1720 X 100,000 = $ 117,200 per lot.
- If a trader buys a EUR/USD mini lot at 1.1720, he buys 10,000 EUR, which is a value of 1.1720 X 10,000 = $ 11,720 per lot.
- In case a trader buys a EUR/USD micro-lot at 1.1720, he buys 1000 EUR, which is a value of 1.1720 X 1000 = $ 1,172 per lot.
What is the highest lot size in forex trading
If you have more money for trading, when it comes to online brokers, in most cases, you can trade 50 lots. This limit is determined to reduce the number of rejections when placing bigger orders. If you want to place larger lot sizes, you will mostly have to contact your broker, which will assist you with valuable trading consulting.
The answer to the question of what is the highest lot size in forex trading depends on many things such as the currency pair, market conditions, the sums you are ready to invest/put on risk. Usual pairs such as USD/EUR are more liquid and can fill bigger orders per price than some exotic pairs like ZAR/AUD, for instance. Anyway, if you are trading large positions, a low key strategy is the best to get the best profits.
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