A “lot” is a unit measuring a transaction amount.

Orders are placed in sizes quoted in lots.

It’s like an egg carton. When you buy eggs, you usually buy them in a carton. One carton includes a dozen (12) eggs.

The standard lot size is 100,000 units of currency.

So a lot of 1 equals 100,000 units of currency.

And a lot of 2 equals 200,000 units of currency.

In addition to standard lots, there are also mini, micro, and nano lot sizes that are 10,000, 1,000, and 100 units respectively.

LOT NUMBER OF UNITS
Standard 100,000
Mini 10,000
Micro 1,000
Nano 100

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, or a fraction of a fraction of a penny.

To take advantage of this small change in value, you need to trade large amounts of a particular currency in order to see any significant profit or loss.

## Examples

Let’s assume we will be using a 100,000 unit (standard) lot size. We will now recalculate some examples to see how it affects the pip value.

1. USD/JPY at an exchange rate of 119.80: (.01 / 119.80) x 100,000 = \$8.34 per pip
2. USD/CHF at an exchange rate of 1.4555: (.0001 / 1.4555) x 100,000 = \$6.87 per pip

In cases where the U.S. dollar is not quoted first, the formula is slightly different.

1. 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
2. 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.