In forex, you don't buy individual units of currency — you trade in standardized blocks called lots. A lot size determines how many units of the base currency you're buying or selling, and directly determines what each pip movement is worth in dollars.
The Four Lot Sizes
| Lot type | MT4/MT5 notation | Units | Pip value (EUR/USD) |
|---|---|---|---|
| Standard | 1.00 | 100,000 | $10.00 |
| Mini | 0.10 | 10,000 | $1.00 |
| Micro | 0.01 | 1,000 | $0.10 |
| Nano | 0.001 | 100 | $0.01 |
Pip values shown are for pairs quoted against USD (EUR/USD, GBP/USD, AUD/USD). For cross pairs like EUR/GBP, the pip value in USD changes with the exchange rate.
How to Choose Your Lot Size
You don't choose a lot size by feel or by what looks like a round number. You calculate it from your risk parameters:
- Determine your dollar risk: Account size × Risk % (e.g., $10,000 × 1% = $100)
- Set your stop loss in pips based on chart structure
- Lot size = Dollar risk ÷ (Stop pips × pip value per standard lot × 0.1 for mini, 0.01 for micro)
Example: $100 risk · 30-pip stop · EUR/USD mini lot pip value = $1 · Lot size = $100 ÷ (30 × $1) = 3.33 mini lots → round to 3 mini lots (0.30 in MT4).
Matching Lot Size to Account Size
A rough guide for keeping per-trade risk at 1%:
- Under $2,000: Micro lots (0.01). At 1% risk on a $1,000 account, you're working with $10 per trade — micro lots give you the granularity to size correctly.
- $2,000–$20,000: Mini lots (0.10). A $10,000 account at 1% risk = $100 dollar risk, which works well with mini lots.
- $20,000+: Start mixing in standard lots. A $50,000 account at 1% risk = $500, which might be 5 mini lots or 0.5 standard lots depending on the stop distance.
Fractional Lots on MetaTrader
MT4 and MT5 support lot sizes to two or three decimal places — for example, 0.03, 0.27, or 1.45. This lets you express the exact lot size the risk formula produces rather than rounding to the nearest whole lot. Most brokers allow minimum lot sizes of 0.01 (one micro lot).
Why Standard Lots Aren't for Beginners
At a standard lot, every pip on EUR/USD is worth $10. A 20-pip loss is $200. A 50-pip loss is $500. On a $5,000 account, a 50-pip loss at one standard lot is 10% of the account — gone on a single trade. This is why experienced traders stress micro and mini lots for smaller accounts: they give you the room to learn without a single bad trade being catastrophic.