• 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. Traders are done in standard, mini, micro and nano lots. Not all broker allow traders to use nano lots. And those who 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 sizes are divided like this:

• 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

When it comes to trading volume, it's calculated differently in Forex than in the stock market.

Forex markets are using various volume indicators to display rise or fall in trading activity.

## Start Trading in 10 Minutes

Apply everything you’ve learnt on a real trading account with up to 1:777 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 simple to follow. Most professional traders never risk more than 1 to 5 % of their trading capital. But how to calculate the trading size? How much lot should you trade, your risks to be around 1 % of your trading capital? The calculations are not that difficult.

Let’s imagine that a trader has just opened 1 standard lot for USD/JPY. What this means is that they want to buy 100,000 Yen worth of dollars.
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 trade, the trader will be given a trading volume which is calculated with the following formula.

{Lot size x exchange rate} = trading volume

So in the case of our example, the formula would work like this.

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.

To calculate how much 1 pip will earn, the USD/JPY pip count for 1 standard lot is equal to 1000/130.000 (If Exchange rate is 130,000) = 7,69 USD.

You can manually calculate the trade size and risks to rewards when you know potential profit target in pips as well as stop loss target. You can also use trading calculators that are offered by majority of Forex brokers. What's great about cTrader platform, is that the calculation is automatic. Which 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 lot in Forex is essential as it helps traders to place right sized trading orders.

### Lot terms and their usage

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

#### Partial lot

Trades can be open 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 the partial lot. This means that the trader did not close their buy position completely. Position is still active, but only 0.5 lot size is left. Opening partial lot sized positions and closing orders partially is highly popular in Forex. Closing orders partially helps traders take profits and still remain in trending markets. They 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 as profits will be tiny. Many brokers are not offering 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 come handy.

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

Lot in forex meaning is critical for proper risk management. Beginners usually choose anything besides standard and mini lots. Trading using standard lots requires having a large trading capital.

It is much more likely for beginner traders to have smaller budgets, which is why nano and micro-lots are typically the most popular. As already mentioned, professionals are using 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 platforms, which makes order placement much simpler.

## Start Trading in 10 Minutes

Apply everything you’ve learnt on a real trading account with up to 1:777 leverage, negative balance protection and outstanding support.

## Forex lots explained – Key takeaways

What is lot in Forex? It's nothing but a unit of measurement. The 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 out.

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 company.

## 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 volume in Forex order? It's the total amount 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 see 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 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. It may not always be correct, though.

### 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, actually. Imagine that you are using \$100 for the trade, and the broker has a leverage of 1:100. If you use it, your trade will be turned into \$10,000 because 100×100. If leverage was 1:50, the trade size would have been \$5,000 because 100×50.

But be careful, leverage is a very dangerous tool that only experienced traders should use.

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

Lots are a rather new concept. You see, lots in Forex became popular when the market started to shift to the internet. This meant that computers were now in charge of calculating and managing trades.

Considering how many trades happen every day, the developers needed to somehow make it easier for computers. So, they simply took large numbers and reduced them. So, what is a standard lot in Forex? 1 standard lot is 100,000 units of currency, which is calculated once, instead of being calculated 100,000 times.

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's important to select trading size properly. Calculating a lot size is essential in this regard. There are online calculators offered almost every broker that can help you decide on the 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 lot, Micro lot, and Nano lot.

### How to calculate volume in Forex trading?

Volume is calculated differently in Forex than in stock market. Stock market is a centralized marketplace, which makes it possible traders to get full information about traded volume, number of transactions and ratio between total and daily traded shares. 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 exact number of transactions. Which makes calculating volume impossible. However, in Forex, traders still get information about volume using volume indicators. The indicators are using increase in tick moves as a basis for measuring volume. Increase in trading activity and transactions are displayed as relative volume numbers and not as absolute.

### What does lot mean in Forex?

In Forex, lot is equal to a 100,000 currency unit. 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 lot (100,000 units of currency), mini lot (10,000 units of currency), micro lot (1,000 units of currency), and nano lot (100 units of currency) available for trading.