In foreign exchange, transaction size is measured in lots. For example, if you were to buy one lot of EURUSD that simply means that you are going to buy 100,000 euros. Remember, that in forex we buy and sell the base currency, the first currency in a pair. Similarly, if you decide to buy one lot of AUDUSD then you will buy 100,00 Australian Dollars. On the other hand, if you sell 0.1 lot of USDJPY then it simply means that you are selling 10,000 US Dollars. One more example. Selling 0.01 lot of GBPUSD means that you are selling 1,000 Pounds Sterling.

In forex, there are three types of lots:

  • Standard Lot which is equivalent to 100,000 units of the base currency
  • Mini Lot which is equal to 10,000 units of the base currency and
  • Micro Lot which equals to 1,000 units of the base currency

Example 2
In forex trading, a lot refers to a standardized unit of measurement for the size of a trade. Of course, the value of a lot can vary depending on the broker and the account type. Still, in general, a standard lot is equal to 100,000 units of the base currency in a currency pair.

For example, suppose you are trading the EUR/USD currency pair, and you buy one standard lot. In that case, you are buying 100,000 euros and selling an equivalent amount of US dollars. If the EUR/USD exchange rate is 1.2000, the value of one standard lot would be $120,000 (100,000 euros x 1.2000 exchange rate).
In addition to standard lots, other lot sizes are available in forex trading, including mini lots (10,000 units of the base currency) and micro lots (1,000 units of the base currency). Some brokers may also offer fractional lots, which allow traders to trade in smaller increments than the standard lot size.

Understanding lot sizes is vital in forex trading because it affects how much you can make or lose on a trade. The larger the lot size, the higher the potential profit or loss and the risk involved. It is important to carefully manage your risk using appropriate lot sizes and stop-loss orders.