Forex Lot
Forex is commonly 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.
Some brokers show quantity in “lots”, while other brokers show the actual currency units.
As you may already know, the change in a currency value relative to another is measured in “pips,” which is a very, very 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.
Assuming we are using a 100,000 unit (standard) lot size. We will now recalculate some examples to see how it affects the pip value.
USD/JPY at an exchange rate of 119.80: (.01 / 119.80) x 100,000 = $8.34 per pip
USD/CHF at an exchange rate of 1.4555: (.0001 / 1.4555) x 100,000 = $6.87 per pip
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
GBP/USD at an exchange rate of 1.8040: (.0001 / 1.8040) x 100,000 = 5.54 x 1.8040 = 9.99416 rounded up will be $10 per pip.
There are different conventions for calculating pip values relative to lot size but whatever way used, I will be able to tell you what the pip value is for the currency you are trading at that particular time. In other words, I will do all the math calculations for you!
As the market moves, so will the pip value depending on what currency you are currently trading. Register and enjoy more information.
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