Lot Sizes Explained: Standard, Mini, Micro and Nano Lots
A lot is a unit count, nothing more
A "lot" is not an amount of risk and it is not an amount of money. It is a fixed number of units of the base currency. Everything else people attach to it — how scary it is, how much it pays, whether you "deserve" to trade it — comes later, from arithmetic.
Those four are standardised enough that nearly every forex broker uses them, though not every broker offers every size. A broker's minimum lot step tells you the increments it accepts: a step of 0.01 means you can trade 0.01, 0.02, 0.03 and so on, which is one micro lot at a time. Some brokers allow a step of 0.001.
The unit is what matters, because risk is calculated on units. Whether your platform asks for "lots" or "units", it is asking the same question: how many units of the base currency.
What one pip is worth at each size
On pairs quoted in USD against a USD account — EUR/USD, GBP/USD, AUD/USD — one pip is 0.0001 of price, and it is already roughly 1 USD per 10,000 units. The table gives pip values for a USD-denominated account.
| Lot size | Units | Pip value, EUR/USD (USD) | Pip value, USD/JPY in JPY | Pip value, USD/JPY in USD at 150.00 |
|---|---|---|---|---|
| Standard | 100,000 | 10.00 | 1,000 JPY | 6.67 |
| Mini | 10,000 | 1.00 | 100 JPY | 0.67 |
| Micro | 1,000 | 0.10 | 10 JPY | 0.07 |
| Nano | 100 | 0.01 | 1 JPY | 0.0067 |
Two things change that picture. First, on JPY pairs a pip is 0.01 of price, not 0.0001, which is why the JPY columns are not simply ten times smaller. Second, when the quote currency is not your account currency, the pip value has to be converted — the rate moves every day, so does the pip value.
| Lot size | Loss on 20 pips | Cost of a 1-pip spread |
|---|---|---|
| Standard | 200.00 USD | 10.00 USD |
| Mini | 20.00 USD | 1.00 USD |
| Micro | 2.00 USD | 0.10 USD |
| Nano | 0.20 USD | 0.01 USD |
Read the standard-lot row once more: a standard lot on EUR/USD loses about 200 USD on a 20-pip move. On a 1,000 USD account that is 20% of the account on one ordinary-looking move, which is why small accounts are told to trade micro lots. It is not snobbery. It is arithmetic: the unit count is ten times smaller, so the loss is ten times smaller.
Going from a risk budget to lots
You never pick the lot size first. You pick the money you are willing to lose, then the distance to your stop, and the lot count falls out of dividing one by the other. Take a 5,000 USD account, risking 1% (50.00 USD), buying EUR/USD with a stop 25 pips away, a 1-pip spread, and commission of 7 USD per standard lot round turn (which is 0.07 USD per micro lot). The broker deals in 0.01-lot steps, so one micro lot at a time.
- Effective stop distance: 25 pips + 1 pip of spread = 26 pips.
- Loss per micro lot: 26 x 0.10 = 2.60 USD.
- Add commission: 2.60 + 0.07 = 2.67 USD per micro lot at the stop.
- Micro lots: 50.00 / 2.67 = 18.73.
- Round down: 18 micro lots = 18,000 units = 0.18 standard lots.
- Check the worst case: 18 x 2.67 = 48.06 USD. Inside the 50.00 budget.
| Including costs | Ignoring costs | |
|---|---|---|
| Position size | 18 micro lots | 20 micro lots |
| Real loss at stop | 48.06 USD | 53.40 USD |
| Against a 50.00 budget | under by 1.94 | over by 3.40 (+6.8%) |
The shortcut answer — 50.00 divided by 25 pips of 0.10 each — lands neatly on 20 micro lots, and it overshoots the budget by nearly 7%. On a small account that difference compounds fast, because the fixed commission is a bigger slice of a small budget than of a large one. The full forex sizing walkthrough covers the same effect on a standard lot.
Why the lot size alone never tells you the risk
Someone trading 1 standard lot is not automatically risking more than someone trading 10 micro lots — those are the same unit count. Risk depends on where the stop is. A standard lot with a 5-pip stop risks 50 USD plus fees; a standard lot with a 100-pip stop risks 1,000 USD plus fees. Same size, twenty times the risk.
This is also why "what lot size should a beginner use" has no single answer. The question only exists once you say how much you intend to lose and where the trade is wrong.
- Ask "units", not "lots". Lots are a broker convention; units are what the arithmetic runs on. Converting early removes a class of errors.
- Check your broker's step before you trust a number. If the minimum step is 0.10 lots, a computed size of 0.18 has to round down to 0.10, and the position is nearly half of what you planned.
- Small accounts are not stuck forever. Micro lots exist precisely so that a small budget can still be expressed accurately. Under-risking by rounding to whole lots is its own mistake.
- Contract specifications differ outside spot forex. Crypto futures and stock CFDs have their own contract sizes and tick values; the lot table above does not transfer to them. The crypto futures guide covers that side.
Compute it once, then let a tool do it
Run through the six steps above on your next trade and compare the answer to what your platform accepts. Once they match, you have confirmed both your pip value and your broker's step. After that there is no reason to do the arithmetic by hand each time.
Related guides
- How to calculate position size in forex — the four inputs and the full formula.
- Leverage, margin and position size — three different things that get mistaken for each other.
- How much should you risk per trade? — the arithmetic behind choosing a percentage.
- Position sizing for prop firm evaluations — daily loss limits and drawdown floors.