Lot on Forex (Lot forex) what is it equal to, size calculator
For the convenience of users, all transactions on the Forex currency market are concluded in standardized volumes, so-called lots.
Lot forex is a standard volume with a strictly defined size of one transaction on the foreign exchange market. It is used to simplify calculations and round off the amounts of transactions involving the purchase or sale of currency.
One lot on Forex is 100,000 units of the base currency, which, when recorded, comes first in the currency pair, that is, the instrument for which the quotation operation is carried out.
For example, when buying euros for US dollars, the EURUSD quote is used, the base currency in this currency pair is, respectively, the European currency, therefore 1 lot for this operation will be equal to 100,000 Euros.
For example, when buying 1 lot of GBPUSD - British pound sterling for American dollars, you pay 150,000 US dollars, while at the same time, if a transaction of the same volume is carried out on the NZDUSD currency pair, then 83,000 US dollars will be enough to complete it.
That is, the cost directly depends on which currency in the currency pair is the base one; the higher the rate of the base currency, the more expensive the lot will be.
Article about the calculation method - https://time-forex.com/info/stoimost-lota
That is, the specific size of the transaction directly depends on which currency is the base currency in the trading instrument used.
Trading is not always carried out only using whole values; sometimes brokers offer their clients to trade using fractional options of 0.1 or 0.01 of a whole Forex lot.
This approach allows you to trade with small amounts without abusing leverage. But even if this option still does not suit the trader, he has to switch to trading micro lots, for which cent accounts are used.
What are the benefits of using a micro lot in Forex?
When trading on a cent account, the trader's deposit is converted into cents, that is, the amount of available funds is multiplied by 100. For example, there were 5 dollars, there will be 500 units on the cent account.
Lot forex undergoes the opposite changes, the transaction amount is divided by the same 100 and reduced by a hundred times.
That is, now one micro lot of Forex will be equal to only $1,000, but nothing will change in the trader’s terminal on the “Volume” tab.
Calculation of the optimal size
Very often traders ask the question: how to calculate the correct lot size in Forex? In fact, implying the optimal transaction volume in accordance with the size of the deposit.
The simplest option is to use a calculator - https://time-forex.com/skripty/raschet-lotov-foreks which will calculate the optimal volume taking into account the acceptable risk.