Understanding Forex Trade Sizes: Micro Lot, Mini Lot and Standard Lot

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As we've mentioned before, capital is the life blood of your trading account. The Forex account types you trade will affect how you first protect, and then grow that capital. A trader wishing to open a new account can generally choose between 3 types of Forex accounts: Standard, Mini, and Micro Nano.

These accounts differ in provided leverageand, depending on the broker, different minimum deposits required to open that account. Most frequently opened is a Standard Account. It's important to note that just because forex micro lot trading have a standard trading account doesn't mean that you are required to trade with one lot size, you always have the option to use lower lot sizes. As you probably guessed, a Mini Account allows you to trade with a mini lot size.

A Micro Nano Account reduces the potential loss even more; it is one-tenth of a Mini Account, though it is not offered by all brokers. For new traders not familiar with trading, a Micro Account or demo account would be a good option to start with. Both Micro and Mini accounts are a good option for new traders because of the reduced potential loss compared to the Standard Account. This allows the trader to gain experience with no risk while we teach them how to trade. However, once a trader has passed our Beeline to Funding programthe Apiary Fund places them in a real, funded account to see what they can do.

In Forex trading, capital is crucial; however, knowledge extends beyond capital. If the trader has skill and knowledge, they can compound a small capital account into a large one.

Forex LingoForex. Originally from Indonesia, Vilas began trading ten years ago to support his love of travel. He figured that, forex micro lot trading long as he could find an internet connection, he would be able to support himself. Inhe came to the United States and a year forex micro lot trading, re-learned everything he thought he knew about forex. Now, he places trades using support and resistance, utilizing signals from EA's.

Vilas helps at the Apiary Fund as a trader forex micro lot trading representative managing the Apiary Fund blog and answering questions in the forum. Standard Accounts Most frequently opened is a Standard Account. Micro Accounts A Micro Nano Account reduces the potential loss even more; it is one-tenth of a Mini Account, though it is not offered by all brokers.

New Traders Both Micro and Mini accounts are a good option for new traders because of the reduced potential loss compared to the Forex micro lot trading Account.

Written by Vilas Kusumahardja Originally from Indonesia, Vilas began trading ten years ago to support his love of travel. Subscribe to Email Updates. The Apiary Fund develops successful traders.

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Lots, leverage and margin are all pretty boring subjects. One exception to this rule is traders from the U. Spread betting usually works differently. In the previous article you learned what a pip is and how to calculate the value of a pip.

To open a trade, you need to buy or sell one or more lots. Nano and micro lots are a fantastic way to trade Forex without risking much money. When you first start trading, you do not want to be trading standard lots. Micro lots allow you to learn Forex without risking the house.

Now you can calculate the value of a pip per lot. The pip value we calculated in the previous article was based on a single unit.

Calculating how much you will make per pip on a trade is straight forward. If the US dollar is not quoted first and you want the pip value in US dollars, the formula is a little different.

Leverage allows you to trade more units than you have. In this case, you would have The important thing to remember about leverage is that it does not affect the value of a lot.

You know that a mini-lot is 10, units of currency and a standard lot is , units. The value of these never changes no matter what your leverage is. If you have Leverage does not affect the value of a lot but has an effect on the number of lots you can have in the market, based on the capital in your account.

The reason they call it leverage is because it is much like trying to lift a very heavy object. Some objects are just too heavy to lift. Leverage may sound great, but it can cause problems too. The higher your leverage the more of your capital you can risk at one time, in comparison to a lower leverage. The trader with Trader 1 takes a long position at Trader 2 takes the same long position at Since Trader 1 has Since Trader 2 has Leverage be extremely dangerous.

You need to be very careful with leverage. In the end though, you are the one that determines the degree of your leverage. Your broker can only determine the maximum leverage allowed.

If you choose to use the maximum that is up to you. Margin is a good faith deposit required by your Forex broker to cover the position you have entered into the market. Without providing this margin, you would be unable to use leverage as this is what your broker uses to maintain your position, and to cover any potential losses.

Different brokers will insist on different levels of margin depending on a number of factors such as the currency pair you are trading and the leverage of your account. The currency pair you are trading is a factor in how much margin is required because each currency pair moves different. This means the margin required to trade those currencies is likely to be higher.

Also since margin is normally quoted in percentage terms, such as 0. The easiest way to think of margin is that it is the 1 in the leverage ratio. So for instance, if your leverage is This will dictate how much you can place in the Forex market. A margin call is what happens when you have no money left in your account. To protect you from losing more money than you have your broker closes out your positions. This means you can never lose more money than you have in your account. The amount of money in your account that is currently used in open trades.

The amount of money in your account minus any open trades. We will continue from the same examples used above. With good money management this should never happen but newbies can slip up. Tom curses himself for taking a long but he keeps the position open. If Tom keeps the position open and it moves too far against him he will get a margin call.

This protects Tom from losing more money than he has in his account. Margin calls are easily avoided if you trade sensibly. However, this is more advanced stuff that you will learn later in the free Forex course. It is very important that you check what the margin polices are with your broker.

Margin policies can differ from broker to broker so if you plan to open an account remember to ask. What is a lot in forex? However, there are several different lot sizes in Forex: Calculate the per unit value of a pip.