What is a Lot in Forex? In the past, spot forex was pip Forex traded in specific amounts called lots, or basically the number of currency units you will buy or sell.
The standard size for a lot is 100,000 units of currency, and now, there are also mini, micro, and nano lot sizes that are 10,000, 1,000, and 100 units. 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. We will now recalculate some examples to see how it affects the pip value. JPY at an exchange rate of 119.
CHF at an exchange rate of 1. USD at an exchange rate of 1. Your broker may have a different convention for calculating pip values relative to lot size but whatever way they do it, they’ll be able to tell you what the pip value is for the currency you are trading at that particular time. In other words, they do all the match calculations for you! As the market moves, so will the pip value depending on what currency you are currently trading. You are probably wondering how a small investor like yourself can trade such large amounts of money.
1,000 as a good faith deposit, which it will hold for you but not necessarily keep. Sounds too good to be true? This is how forex trading using leverage works. The amount of leverage you use will depend on your broker and what you feel comfortable with. Once you have deposited your money, you will then be able to trade.
Of course, any losses or gains will be deducted or added to the remaining cash balance in your account. In the example above, the broker required a one percent margin. 1,000 as a deposit on the position. 1,000 is NOT a fee, it’s a deposit. You get it back when you close your trade.