Lots and position size

Forex is traded in standardized quantities called lots.

• Standard lot = 100,000 units of the base currency.
• Mini lot = 10,000 units.
• Micro lot = 1,000 units.
• Nano lot = 100 units (offered by some brokers).

Why lot size is the most important decision

Your lot size sets how much each pip is worth, and therefore how much you win or lose per pip of movement. The same 30-pip stop loss is a US$3 loss on a micro lot and a US$300 loss on a standard lot.

This is why position sizing, not entry timing, is what separates traders who survive from those who blow up. The professional approach is to work backwards:

1. Decide how much money you are willing to risk on the trade (e.g. 1% of your account).
2. Measure the distance to your stop loss in pips.
3. Choose the lot size so that risk in money ÷ stop in pips equals your pip value.

We cover this calculation step by step in the Risk Management track — but absorb the principle now: you size the position to the risk, never the other way around.