// TRADING TERMINOLOGY
What is Lot Size?
A lot is the standardized unit used to measure the volume of a trade. It dictates exactly how much money each pip of movement is worth.
In-Depth Explanation
You do not buy "100 pounds" of a currency. You buy lots.
In Forex, a Standard Lot is 100,000 units of the base currency. A Mini Lot (0.1) is 10,000 units, and a Micro Lot (0.01) is 1,000 units.
If your account size is £1,000 and you open a 1.0 Standard Lot, you are massively over-leveraged. For a Standard Lot on EUR/USD, every pip movement is worth roughly $10. A standard 20-pip stop loss would cost you $200 (20% of your account). Position sizing based on lot size is the only mathematical way to ensure you never risk more than 1% of your account per trade.
Free Tool
Position Size Calculator
Never guess your lot size. Use our calculator to instantly determine the exact lot size needed to maintain a strict 1% risk rule.
Exact Lot Sizing
Account Currency Conversion
Risk % Input
Practical Example
"You want to risk £50 on a trade with a 20-pip stop loss. You calculate that each pip must be worth £2.50. You adjust your lot size accordingly (roughly 0.25 lots) before entering the trade."
Master the language of risk
Knowing the terms is just the start. Learning how to apply them is where the edge is found.
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