Okay, the title of this article can be a bit confusing, so allow us to clarify! When we say a “lot” in the trading world, we mean the size of the order/trade.
For example, we would measure orders like this: 1 lot, 2 lots, 5 lots etc, or even a fraction like: 1.1 lots, 1.5 lots and so on.
So, basically, when we start placing buy/sell orders on some trading platforms, it’s how we measure that order’s size.
Now you might be wondering, how much is 1 lot? Well, do you remember when we previously talked about the base and the quote currency?
Basically, the first currency in a pair, the left-most currency is the base currency, and the second currency in a pair is the quote or counter currency.
So, when we place an order to buy 1 lot of EUR/USD for example, it means that we’re actually buying 100K Euro.
Now, if we sell 1 lot EUR/USD then we’re selling 100K Euro. Whenever we buy or sell a currency pair, in reality, we buy/sell the base currency.
Traditionally, when we refer to a “lot” we mean a standard lot that is equal to 100K units of the base currency. Similarly, a “mini lot” is equal to 10K units of the base currency, and a “micro lot” corresponds to 1000 units of the base currency.
Now you know how much is a lot!
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