I am going to break this frequently asked question regarding forex lot sizes and show you the recommended lot size forex trading.
When trading forex, the right lot size is important for your trading capital. The lot size a forex trader uses tells a lot about a trader’s risk management.
Brokers usually offer their clients different lot that will suit their trading capital, the lot sizes are Nano, Micro, mini and standard.
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RECOMMENDED LOT SIZE FOREX FOR BEGINNERS
The recommended lot size for a beginner is based on their trading capital and experience. I have given the recommended lot size for trading forex below.
Note that as a beginner in the forex market, you lower your expectations as you can lose all your trading capital.
RECOMMENDED LOT SIZE FOREX
This is the recommended lot size for trading forex based on trading capital from $100-$20,000:
|CAPITAL ($USD)||RECOMMENDED LOT SIZE|
BEST LOT SIZE FOR $10 IN FOREX
I wouldn’t recommend trading with a $10 account; however, there are forex traders that were lucky and got away with it, even with high leverage of 1:888, a $10 trading capital is not ideal for trading. For the purpose of this article, you can use a Nano or micro lot size for a $10 account.
BEST LOT SIZE FOR $5000
A $5000 trading account is a good start for trading the forex market; however, you still need the right knowledge to grow this account.
For proper risk management if you intend to place multiple trades on multiple pairs, then you shouldn’t go more than 0.4 lot size per trade.
FOREX LOT SIZE CALCULATOR
Forex lot size calculator is a forex tool that easily calculates your position in a unit and helps you manage your risk. Babypis.com has a simple lot size calculator available for forex.
FOREX LOT SIZE AND LEVERAGE
Forex lot size and leverage go together; in simple terms, leverage in forex is when a trader is given the ability by his broker to control large funds with little capital.
While lot size is the unit at which a trader chooses to place a trade.
0.01 lot =1000 units
HOW IS LOT SIZE CALCULATED IN FOREX?
The lot size is calculated in units for example:
0.001 Nano lot size is equaled to 100 units which are 1 cent per pip gained micro lot size is equaled to 1,000 units which are 10 cents per pip gained
0.01 Mini lot size is equaled to 10,000 units which are $1 per pip gained
0.1 Mini lot size is equaled to 10,000 units which are $1 per pip gained
1 standard lot size is equaled to 100,000 units which are $10 per pip gained
There are basically four types of lot size;
Nano lot size
Micro lot size
Mini lot size
Standard lot size
These four lot sizes are used based on account sizes.
Nano, micro, and mini are for smaller account sizes while the standard is for a large account.
WHAT IS A GOOD LOT SIZE IN FOREX?
A good lot size in forex is one that will enable the trader not to risk more than 3-4 percent per trade.
WHAT LOT SIZE IS GOOD FOR A $1000 ACCOUNT?
A $1000 account shouldn’t use more than 0.1 or 0.2 per trade based on the spread of the trading pair.
WHAT IS 0.1 LOT SIZE IN FOREX?
0.1 is a micro lot size in forex, this means that for every 10 pip you make $10.
WHAT DOES 1.00 LOT SIZE MEAN?
1.0 is a standard lot size in forex, this means that for every 10 pip you will make $100.
WHAT IS THE BIGGEST LOT SIZE IN FOREX?
Lot sizes vary with brokers, some brokers offer as high as 500 which requires millions of dollars of capital to trade with, XM broker offers up to 50 lot size.