• Accounts
• Platforms
• Education
• Partnerships
English

# What is a lot in Forex and how to calculate trading volume?

A lot in Forex trading is a standard unit of measurement. Trades on the forex market are done in standard, mini, micro and nano lots. Not all brokers allow traders to use nano lots. And those that do, usually offer micro trading accounts.

The most popular types of lots in Forex are standard size lots. For instance, when a trader buys or sells a standard lot size of an EUR/USD, he or she trades using 100,000 currency units. And each time currency makes a pip move, trader losses or gets 10 USD.

If you can't afford to trade using standard lots, you can go for smaller positions. The common forex lot sizes can be broken down as follows:

• Standard lot – 100,000 units of currency
• Mini lot – 10,000 units of currency
• Micro lot – 1,000 units of currency
• Nano lot – 100 units of currency

Forex trading volume is calculated in a different manner than on the stock market.

Forex markets use various volume indicators to display the rise or fall in trading activity. These indicators help traders better understand the dynamics of the market and decide which pairs to trade and when.

## Start Trading in 10 Minutes

Apply everything you’ve learnt on a real trading account with up to 1:2000 leverage, negative balance protection and outstanding support.

## How to calculate trading size

When making a trading decision, it's important to manage your risks. Most risk management strategies are quite simple to follow. Most professional traders never risk more than 1 to 5 % of their trading capital. But how do you calculate the trading size? How many lots should you trade for your risks to be around 1 % of your trading capital? The calculations are not that difficult if we consider the example below:

Let’s imagine a trader has just opened 1 standard lot for USD/JPY. What this means is that they want to buy dollars using 100,000 Yen.

Let’s say that the exchange rate is 1.3, meaning 1 JPY = 1.3 USD (this is not the real exchange rate of USD/JPY).

So, upon opening this position, the trader will be trading a volume which is calculated using the following formula:

{Lot size x exchange rate} = trading volume

Therefore, in the case of our example, the formula would work thusly:

Trading volume = {100,000 × 1.3}

This means that the trading size is \$130,000. If the exchange rate was 1.4 then it would be \$140,000, etc

To calculate how much 1 pip will earn, the USD/JPY pip count for 1 standard lot is equal to 1000/130.000 (If the exchange rate is 1.3) = 7,69 USD.

You can manually calculate the trade size and the risk to rewards ratio when you know the potential profit target in pips, as well as the stop loss target. You can also use trading calculators that are offered by the majority of Forex brokers. What's great about the cTrader platform is that the calculation is done automatically. This means that you simply fill in the amount of pips, and it will display your risks and rewards in terms of money. Then you can adjust the trading lots to fit your trading strategy.

Understanding the meaning of a lot in Forex is essential as it helps traders place right-sized orders.

### Lot terms and their usage

You will meet lots in various contexts. Let's discuss each to better understand the meaning of a lot in Forex:
• Round turn lot
• Partial lot
• Lot

#### Partial lot

Trades can be open positions in partial lots, for instance, instead of 1 lot, you can purchase or sell 0.1, 0.2, 0.5 etc. lot sizes. For instance, when a trader opens a buy order for 1 standard lot but closes it with a sell order of 0.5 standard lots, we call it a partial lot. This means that the trader has not closed their buy position completely. The position is still active, but only a 0.5 lot size is left. Opening partial lot positions and closing orders partially is highly popular in Forex. Partially closing orders helps traders take some of their profits and still remain in trending markets. Traders also often use trailing stops or move stop-loss orders manually.

#### Lot

In trading, lots have various sizes to make trading accessible for traders that are short in funds. As already mentioned, there are Standard, Mini, Micro and Nano lots. Trading using Nano lots is not recommended for traders expecting substantial profits.. Many brokers do not offer trading using nano and micro accounts. However, when it comes to testing trading strategies live without risking too much capital, micro and nano trading accounts can come in handy

### What is a nano lot? What do sizes change?

It is crucial to understand the definition of a lot in forex, meaning that it is critical for proper risk management. Beginners usually choose anything besides standard and mini lots. Trading using standard lots requires a large amount of trading capital.

It is much more likely for beginner traders to have limited budgets, which is why nano and micro-lots are typically the most popular. As already mentioned, professionals use nano and micro accounts for testing strategies live. There's one more reason to use small trading accounts. If you are opening a trading account with a new broker, a small trading account will help you understand the broker's policies and trading fees better.

Many trading platforms have their own methods of calculating lots. Some are more user-friendly, which makes order placement much simpler.

## Start Trading in 10 Minutes

Apply everything you’ve learnt on a real trading account with up to 1:2000 leverage, negative balance protection and outstanding support.

## Forex lots explained – Key takeaways

What is a lot in Forex? It's nothing but a unit of measurement. Its size ranges from 100,000 to 100 and can be applied to pretty much any currency. They’re mostly used to track the trading volume or help beginner traders.

Trading volume is something used to determine the level of a trader. If the volume is high, it means they can access some more advanced tools and services from the brokerage.

## FAQ on Forex lots and volume

### Where is my trading volume tracked?

Almost every trading software has a Forex trading volume indicator attached to it. What is the volume in a Forex order? It's the sum of capital you put in your trade – including both opening and closing amounts. So, whenever you are trading, it should be very easy to simply open your account details and view the amount displayed in front of you.
If you still can’t see it or the software does not have that feature, then the best way is to simply contact your broker’s customer service team and ask to be connected with an account manager. They will be able to figure out your trading volume within minutes. Or you can just see your FX lot sizes and multiply them by the exchange rate. However, it may not always be correct.

### How can I increase my trading volume?

There are only two ways you can increase the trading volume in Forex. Either open larger trades that will require a larger deposit, or use the maximum leverage available.

Leverage is basically funds borrowed from the Forex broker. Most volume Forex trading strategies revolve around leverage. Imagine that you are using \$100 for the trade, and the broker has a leverage of 1:100. If you use it, your buying power will reach \$10,000. Conversely, if the leverage was 1:50, the trade size would have been \$5,000 because.

However, it must be noted that leverage carries a high degree of risk and is not advisable for inexperienced traders

### Why use lots and not just regular numbers?

Lots are a relatively new standard unit of measurement that came about after the advent of online trading on the forex market.

Considering how many trades are executed every day, A simple unit of measurement was necessary and that is why lots were created, So, what is a standard lot in Forex? 1 standard lot is 100,000 units of currency, which bundles 100,000 units in a standard unit of measurement.

Therefore, by using lots, Forex traders speed up the trading process quite a bit.

### How should I calculate my lots?

When making a trading decision, it is important to select the trading size properly. Calculating a lot size is essential in this regard. There are online calculators offered by almost every broker that can help you decide the appropriate lot size. It's critical to know in advance the size of your stop-loss and take-profit orders in pips. A standard lot refers to 100,000 units of base currency. 1 lot equates to \$10 per pip movement. And you can also use mini, micro, and nano lots as well.

### How to calculate volume in Forex trading?

Volume is calculated differently in Forex than in the stock market. The stock market is a centralized marketplace, which makes it possible for traders to get full information about traded volume, number of transactions and ratio between total and daily traded shares. Conversely, the forex market is decentralized. There are various exchanges where you can trade EUR/USD, USD/JPY, GBP/USD, or any other pair. The point is that it's very difficult to calculate the exact number of transactions. This also makes calculating the trading volume impossible. However, in Forex, traders still get information about volume using volume indicators. The indicators use increases in tick moves as a basis for measuring volume. An increase in trading activity and transactions is displayed as a relative volume number and not as an absolute.

### What does lot mean in Forex?

In Forex, a lot is equal to 100,000 units of currency. To better understand lots and other units, let's discuss an example. When you go to a shop, you can buy goods using cents, 1, 5, 10, 20, 50 or 100 dollar notes. Similarly, when trading, traders need general units to make transactions. There are: standard lots (100,000 units of currency), mini lots (10,000 units of currency), micro lots (1,000 units of currency), and nano lots (100 units of currency) that are available for trading.