What Is a Lot in Forex
Every novice Forex trader, at the beginning of his journey in the financial markets, faces the concept of the lot. On the majority of trading platforms, the lot size should be set independently. So, what is a lot? Does its size matter? How can it affect the transaction? You will learn the answers to these and many more questions after reading this article.
What Is a Lot Size in Forex?
A lot is a unit of measurement of a product at an auction or an exchange. A lot size means a certain volume of goods, which is convenient to operate in trading.
For example, at auctions the lot is usually one item:
- a work of art
- a piece of jewelry
- an ancient artifact, etc.
At the exchange, the lot is often formed by a certain amount of goods:
- 100 barrels of oil
- 100 ounces of gold
- 100,000 currency units, etc.
As on any exchange, Forex lot is a standard unit of measurement of goods traded. Lot size differs depending on the type of asset:
- energy resources
- cryptocurrencies, etc.
Let’s say, a lot of the EUR/USD currency pair on the Forex market is 100,000 euros, the lot of GBP/USD is 100,000 pounds, the lot of USD/JPY is 100,000 dollars, etc. In currency pairs, the lot will almost always be 100,000 units of base currency – the first one in the currency pair.
Forex lots may differ, not only by the asset but also by type and size.
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