When you choose to actively place a trade, you pick a lot size, which is really just the amount of units you want to buy or sell in the market. This is the biggest deciding factor on how much money you’re willing to lose or how much you could make!

The higher the lot = bigger gains/bigger losses (good/bad).

Now let’s not get too ahead of ourselves, as making your lot size high right off the bat can be a dangerous game. You need to really know what you’re doing and manage your risks properly.

Here are the 3 main lot sizes:

Micro – 0.01 (1,000 units)
Mini – 0.10 (10,000 units)
Standard – 1.00 (100,000 units)

Micro – $0.10 a pip
Mini – $1.00 a pip
Standard – $10.00 a pip

Now THAT may sound super confusing, but I’ll break it down. Let’s use the micro lots (.01) for example. Think of a PENNY.

If the market moves from 1.30000 to 1.30010, the market moved up 1 pip, so if you bought the pair, you’re up 10 cents. If the market goes from 1.30000 to 1.30050, the market moved up 5 pips, which means you’re up 50 cents.

If the market moved one TICK (1.30000 to 1.30001), you would make one penny. If the market moved from 1.30000 to 1.30005, you would make 5 cents.

The same goes for a standard (1.00). Think of that as $1. If the market moves from 1.30000 to 1.30010, the market moved up 1 pip, so if you bought the pair, you’re up $10 ($10.00 a pip).

If the market moved one TICK (1.30000 to 1.30001), you would make $1. If the market moved from 1.30000 to 1.30005, you would make $5.

So you clearly can see how a lot size determines how much money you can make or lose! If you used a 1.00 lot size and the market shot down from 1.30000 to 1.29000, the market shot down 100 pips. Meaning, if you sold the pair and held it to the end, you would have made $1000! If you bought the pair and held it to the end without a stop loss, you would have lost -$1000.

NOTE: We’ll discuss what a stop loss is in detail in the next section.