Lotsize

LOT SIZE is the amount / quantity of a trade that u bought or sold. It’s sometimes called your Position size / Trade size. In forex, these currencies are not bought and sold singly. They are bought and sold as packs called Lotsizes. That is what makes the gain appreciable, if not your profit in forex would have been $0.0001 or something like that. But because you buy this currency in Bulk / Packs known as Lotsizes, that’s why the gain is appreciable.

The standard size for a lot is 100,000 units of currency, and now, there are also mini, micro, and nano lot sizes that are 10,000, 1,000, and 100 units.

STANDARD LOT CONTAINS 100,000 UNITS AND IS REPRESENTED ON MT4 BY 1.0

MINI LOT CONTAINS 10,000 UNITS AND IS REPRESENTED ON MT4 BY 0.1

MICRO LOT CONTAINS 1,000 UNITS AND IS REPRESENTED ON MT4 BY 0.01

Just like your mom would threaten not to allow you ride your BMX bicycle your uncle brought you from Port Harcourt unless you came first in your class of 157 students, I won’t show you how position sizes works until you fully understand what each lot size means. if you want to ride your bicycle by evening so your friends won’t laugh at you for not having access to yours, follow my explanation with rapt attention.

Let’s assume we have 3 traders A, B and C that deals on Jean wears. You know for them to make profit, they can’t just buy single pairs of jeans from the wholesaler. They need to buy these Jeans in bundles for the profit made to be appreciable. Those bundles are what we call LOTSIZES Now assuming trader a buys 100,000 bundles of jeans, and trader B buys 10,000 bundles of jeans while trader C buys just only 1,000 bundles of Jeans. You would agree that trader A would make more money than Trader B, who will in turn make more money than Trader C. That is a typical illustration of Lot sizes. In the Illustration above trader A bought standard lot size while trader B bought mini lot size while trader C bought micro lot size.

Now let’s see the Pip Equivalent of each lot size. For:

STANDARD LOT SIZE 1 PIP = $10

MINI LOT SIZE 1 PIP = $1

MICRO LOT SIZE 1 PIP = $0.1

Let’s note them down. If 3 traders trade a currency pair, and 3 of them made 50 pips. Let’s say Trader A traded 1 Standard Lot size of the pair while Trader B, traded 1 Mini Lot size of the pair and the Last Trader C, traded 1 Micro Lotsize of the pair.

Trader A would make 50 pips $10 = $500

Trader B would make 50 pips $1 = $50

Trader C would make 50 pips $0.1 = $5

So even though they still participated in the same trade and the market moved in their direction bythe same number of pips, their profits were different because the amount of that particular currency they bought was different. I believe this concept is now clear.

I know your’re about to start calculating how much in naira does $100k worth, don’t bother maidia, that’s some NGN126million. Even your village head can’t afford to put such amount in forex, so who are you maidia?😂💔

Now the question is: how can I afford a hundred thousand dollars when I don’t even worth a thousand naira? Well, if you truly don’t have a thousand naira, forex isn’t for you, go complete your welding apprenticeship, e go favour you.

We’d discuss extensively how you can be able to purchase these big lotsizes with your small account in the next chapter. Ladies and geneltman, welcome to leverage…