Lot size in trading: a beginner's guide

In financial markets, lot size determines how many units of an asset you will trade. It’s crucial because it directly defines your potential risk and reward per trade.

The 4 main types:

Standard lot: 100,000 units. For experienced traders with large capital. If EUR/USD moves 1 pip, you gain/lose $10.

Mini lot: 10,000 units. Popular among beginners. Less risk, less reward.

Micro lot: 1,000 units. For small accounts. 1 pip = $0.10 profit/loss.

Nano lot: 100 units. For demo accounts or very small accounts.

How to choose:

1. Your account size: Small account → start with micro or nano lots.
2. The golden rule: never risk more than 1-2% of your capital on a single trade.
3. Your experience: beginner = small lots to learn.
4. Your strategy: quick speculation requires smaller positions.

Real example:

Account: $1,000 | Trade: 0.1 lot of gold at $1,900/oz with 1:100 leverage

• Actual investment: controlling $19,000
• If gold rises $5: you gain
• If gold drops $5: you lose

Leverage amplifies both gains and losses. Lot size is your tool to control that exposure. Choose wisely based on your capital and experience.