What is a Lot in Forex

Generally, Forex is only traded in specific amounts. These amounts are called “lots”. The standard size for a lot is 100,000 units. There are also mini (10,000 units), micro (1,000 units), and nano (100 units) lot sizes.

Lot	Number of Units
Standard	100,000
Mini	10,000
Micro	1,000

The change in currency value relative to another is measured in pips. One Pip is a small percentage of a unit of currency’s value. To take advantage of this minute change in value, you need to trade large amounts of a particular currency in order to see any significant profit or loss.

Using a standard lot size (100,000 units), we will now calculate some examples to see how it affects the pip value.

1. USD/JPY at an exchange rate of 119.80 (.01 / 119.80) x 100,000 = $8.34 per pip

2. USD/CHF at an exchange rate of 1.4555 (.0001 / 1.4555) x 100,000 = $6.87 per pip

In cases where the U.S. dollar is not quoted first, the formula is slightly different.

1. EUR/USD at an exchange rate of 1.1930 (.0001 / 1.1930) X 100,000 = 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip

2. GBP/USD at an exchange rate or 1.8040 (.0001 / 1.8040) x 100,000 = 5.54 x 1.8040 = 9.99416 rounded up will be $10 per pip.

Pip values may be calculated using different conventions, depending on the lot size, but whichever way they are calculated, your broker will be able to tell you what the pip value is for the currencies you're trading at that time. As the market moves, the pip value will too, depending on the currency.