Lots: standard, mini and micro
What you learn in 3 minutesA lot is the word for how much of an instrument one trade controls. On the platform it appears as a number you choose before you click buy or sell: 1.00, 0.10 or 0.01. Those three sizes are called standard, mini and micro, and the size you pick sets both the value of one pip and the amount of money that moves when the price moves against you. On an account holding A$500, the same 20 pip move costs A$2 on a micro lot and A$200 on a standard lot.
Three lot sizes on a A$500 account
| Step | Amount | Note |
|---|---|---|
| Standard lot | 1.00 lot, 100,000 units of AUD/USD | The base size the platform shows as 1.00 |
| Pip value at 1.00 lot | A$10 per pip | One pip is 0.0001, so 100,000 x 0.0001 = 10 units of the quote currency, converted at the current rate |
| Mini lot | 0.10 lot, 10,000 units | One tenth of a standard lot |
| Pip value at 0.10 lot | A$1 per pip | One tenth of A$10 |
| Micro lot | 0.01 lot, 1,000 units | One hundredth of a standard lot |
| Pip value at 0.01 lot | A$0.10 per pip | One hundredth of A$10 |
| Risk on a 20 pip stop at 1.00 lot | A$200 | 20 x A$10 |
| Risk on a 20 pip stop at 0.10 lot | A$20 | 20 x A$1 |
| Risk on a 20 pip stop at 0.01 lot | A$2 | 20 x A$0.10 |
Brokers differ in how they round pip values, in the spread they quote, and in any commission or swap charged on top. The figures above use the AUD/USD rate of about 0.6640 and do not include those costs.
The mistake people make here
The common mistake is to open a standard lot because the number looks small on the ticket, without working out what one pip costs. At 1.00 lot a 20 pip stop is A$200, which is 40 per cent of a A$500 account, so a short run of losses can end the account. The fix is to decide the money you are willing to lose first, then divide by the pip value to find the lot size. On A$500, a A$10 risk on a 20 pip stop is 0.05 lot, which sits between mini and micro. ASIC requires brokers to offer negative balance protection to retail clients, but that does not stop a position from being closed out.Check yourself
AUD/USD is at 0.6640. What is one pip worth on 0.20 lots?
0.20 lots is 20,000 units. One pip is 0.0001, so 20,000 x 0.0001 = 2 units of the quote currency, which converts to about A$2 per pip.
A trade risks A$15 with a 30 pip stop. What lot size does that imply?
A$15 divided by 30 pips is A$0.50 per pip. Since a standard lot is A$10 per pip, A$0.50 is 0.05 lot.
How many micro lots make one standard lot?
One hundred. A micro lot is 0.01 lot and a standard lot is 1.00 lot, so 1.00 divided by 0.01 is 100.