What is the lot?

The lot is the unit of measurement of the size of the deal in trading, and it is the basic element in the forex market and trading contracts for differences, and it is considered one of the most important things that must be known to properly manage capital. Within risk management, you must know the amount of opening the deal size relative to the amount of your trading account.
Each 1.00 standard lot equals 100,000 units of the base currency, the higher the number of lots, the higher the invested amount and vice versa.

Lots have different sizes, including the standard one with a value of one hundred thousand dollars, the small one with ten thousand dollars, and the micro with a value of one thousand dollars. Most traders tend to the small and micro contracts, on the principle that keeping the lot size within the reasonable for the account will help to stay in the market for a longer period.

In short, an appropriate lot is the correct lot size that you place to trade the global currency market, as an essential step for risk management and long-term trading, too much risk may harm your account if the market index is not in your favour.

So when calculating the appropriate lot size to enter into a trade, you must know the size of the potential risks and the ability to go into it and bear it.

Mark Douglas in his book “Trading In The Zone” advises every trader to think about the size of the lot he trades, and the effect of the market movement on him, and likening it to the support he gets in order to cross a high valley, a small trade size helps you cross the valley through a bridge It is wide and stable, and therefore will not be affected by any external factors (a storm or heavy rain..), but the road will be narrow and stifling if the volume of trade is large, and therefore any simple external factor will lead you to a point of no return.

We clarify some recommendations in the deals for the size of the contract in relation to the capital:

🔸100$ = 0.01

🔸500$ = 0.03

🔸1000$ = 0.06

🔸2500$ = 0.16

🔸5000$= 0.30

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