The Concept of a Lot about Forex

Convert Pounds to Dollars: Lot ConceptThe Forex trading is to take advantage of the change pip exchange rate, or a variation of 0.0001 unit (or for certain currencies including the yen 0.01 change).

 

It is therefore necessary to take positions on thousands or hundreds of thousands of units of money if you want to generate significant profits.

 

A lot is a standard unit of measurement used to quantify the amount of trading in Forex.

 

The size of a standard contract currency is 100,000 units of the base currency. This amount is in this case a lot.

 

On Forex, we find mainly four categories of items:

– The standard lot that is 100,000 units

– The mini lot is equivalent to 10 000 units

– The micro lot is 1000 units

– The nano-lot is 100 units

 

Consider an example where the unit of currency of the lot is the dollar (the dollar is now the base currency).

 

If an investor buys a standard lot of EUR / USD at 1.3920, he bought € 100,000 worth 1.3920 X 100,000 = $ 139 200. The goal is to sell when 100 € 000 will be worth more than $ 139,200.

 

If an investor buys a mini lot of GBP / USD at 1.3920, he bought € 10,000 worth 1.3920 X 10,000 = $ 13 920. The goal is to sell when the € 10,000 will be worth more than $ 13 920.

 

If an investor buys a micro lot of GBP / USD at 1.3920, he bought € 1000 for a value of 1.3920 X 1000 = $ 1392. The goal is to sell when the € 1,000 will be worth more than $ 1392.

 

If an investor buys a nano-lot of GBP / USD at 1.3920, he bought € 100 worth 1.3920 X 100 = $ 139.2. The goal is to sell when the € 100 will be worth more than $ 139.2.

 

For most listings between currencies, the lot report mentioned above is the standard norm.

Originally posted 2013-09-18 09:12:32. Republished by Blog Post Promoter