Forex glossary
Lot (position unit)
Documentation context: The 100,000-unit size is the ordinary FX convention; the provider specifies contract size and minimum volume for the actual symbol.
A lot is a contract-size unit defined by the instrument specification. Under the ordinary FX convention, a standard lot is 100,000 base units, a mini lot 10,000 and a micro lot 1,000. Other contracts can have different units per lot, minimum sizes and increments.
Illustrative example
How does it work in practice?
A fictional specification defines one lot as 100,000 EUR, so 0.03 lots represents 3,000 EUR. Check the units per lot separately for another symbol.
Contract units, notional and leverage
EUR/USD model: one lot is 100,000 EUR; the rate is 1.10 USD per EUR. For a 0.20-lot position, assume equity of 5,500 USD and margin at 5% of notional.
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| Term | What it describes | Shared example |
|---|---|---|
| Lot (position unit) | A contract unit, not the account currency. | This specification defines one lot as 100,000 EUR. |
| mini lot (0.1 lot) | One tenth of a standard lot. | 0.10 lots represents 10,000 EUR. |
| Micro lot (0.01 lot) | One hundredth of a standard lot. | 0.01 lots represents 1,000 EUR. |
| Position size (lot quantity) | The lot count or unit quantity selected for a position. | 0.20 lots × 100,000 = 20,000 EUR. |
| Position notional (notional value) | Exposure stated in a currency, distinct from margin. | 20,000 EUR × 1.10 = 22,000 USD; 5% margin is 1,100 USD. |
| Leverage | Actual exposure relative to equity, distinct from notional relative to margin. | 22,000 / 5,500 = 4:1 effective leverage; 22,000 / 1,100 = 20:1 relative to margin. |
Takeaway: Convert lot count through contract size into notional first. State the denominator before calculating a leverage ratio.
Change an assumption, see the result
What changes if…?
Change lot count and units per lot. Observe how the same lot count represents a different instrument quantity under a different specification.
EUR/USD model: pip = 0.0001; pipette = 0.00001. Initially one lot is 100,000 EUR. Units per lot, point and tick can be changed separately as exercise assumptions. A fractional tick count means the move is not a multiple of the stated tick. Check actual specifications with the provider. Pip value: USD.
Check your understanding
Convert lot count into base units using the stated contract size.
Show the answer and explanation
3,000 EUR
0.03 × 100,000 = 3,000 EUR. USD value and required margin need additional inputs.
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Related terms
Sources and documentation
- OANDA Corporation: Do you offer micro lots?
OANDA Corporation documentation states the 100,000, 10,000 and 1,000 base-unit convention and distinguishes unit-based from lot-based volume entry.
Document read: - MetaTrader 5: Market Watch
Symbol specifications define contract size, volume constraints, margin calculation, execution rules and the commission charging model.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.