Lot size
Also called Lot, Lots, Trade volume, Trade size, Volume
Lot size is the volume of a trade, counted in lots. In forex, one standard lot is 100,000 units of the base currency, and the lot size you choose sets how much money each pip of price movement is worth.
Lot size and stop distance together decide how much money you lose when a stop is hit. The lot is the part you choose. On a pair quoted in US dollars, the same 25-pip loss costs $2.50 at 0.01 lots and $250 at 1.00 lot. Choose the lot after you know your stop, never before.
What one lot is worth per pip
A pip is the standard unit of price movement on a currency pair: the fourth decimal place on most pairs (0.0001) and the second decimal place on yen pairs (0.01). The base currency is the first currency in the pair, and it is what a lot counts.
On any pair where the US dollar is the second currency, the pip value of each lot type is fixed:
| Lot type | Typed in the order window | Units of base currency | Value of 1 pip | 25-pip loss |
|---|---|---|---|---|
| Standard | 1.00 | 100,000 | $10 | $250 |
| Mini | 0.10 | 10,000 | $1 | $25 |
| Micro | 0.01 | 1,000 | $0.10 | $2.50 |
Any size in between works the same way: multiply the lots by $10 to get the value of one pip. So 0.35 lots is $3.50 per pip.
These values hold only when the US dollar is the second currency. On any other pair, the pip value comes out in the second currency. Convert it to your account currency before you use it in the formula below.
As an illustrative example, take USD/JPY at a price of 150 and a US dollar account. One pip is 0.01, so 1.00 lot moves 100,000 × 0.01 = 1,000 yen per pip. In dollars that is 1,000 ÷ 150 = $6.67 per pip. With $50 at risk and a 25-pip stop, the stop costs 25 × $6.67 = $166.75 on 1.00 lot. Then $50 ÷ $166.75 = 0.299, which rounds down to 0.29 lots. The $10 shortcut would give 0.20 lots here, and you would risk about a third less than you planned.
The lot size formula
Lot size = Money at risk ÷ (Stop distance in pips × Pip value of 1 lot)
Money at risk is your account balance times the percent you accept losing on this one trade. Stop distance is the number of pips between your entry and your stop loss.
Work it in this order:
- Decide the stop loss from the chart.
- Turn your risk percent into money.
- Divide that money by the cost of the stop on 1.00 lot.
- Round down to the nearest lot step your broker allows.
You type the lot in the order window, and the symbol's specification lists the minimum lot, the maximum lot and the lot step.
Worked lot sizes for $500, $5,000 and $50,000 accounts
The figures here are an illustrative example: 1% risk per trade, a 25-pip stop, and a USD-quoted pair where 1.00 lot is worth $10 per pip. The stop costs 25 × $10 = $250 on 1.00 lot.
- $500 account: $500 × 1% = $5. Then $5 ÷ $250 = 0.02 lots.
- $5,000 account: $5,000 × 1% = $50. Then $50 ÷ $250 = 0.20 lots.
- $50,000 account: $50,000 × 1% = $500. Then $500 ÷ $250 = 2.00 lots.
Most balances do not give a round answer. The calculation below runs the same example for a $650 account with a 0.01 lot step, where the result has to be rounded down.
Now reverse it. Suppose all three accounts copy the same 0.20 lots instead of sizing the trade. Each loses $50 at the stop, but the chart below shows how different that $50 is for each account.
If the formula gives less than the smallest lot, skip the trade
When the result is below your broker's smallest lot, the smallest lot is already too big for that trade. In the same example, a $500 account with a 100-pip stop gets $5 ÷ (100 × $10) = 0.005 lots. If the smallest lot is 0.01, taking the trade risks $10, which is 2% and double the plan.
The alternative is a tighter stop, but only if the chart allows it. If no valid stop level sits closer to your entry, leave the trade.
Lot size on gold, crypto and stocks
A lot is only a bundle. How much sits in the bundle is the contract size, and it changes with the instrument. A gold lot counts ounces, a crypto lot counts coins, and a stock lot counts shares.
So 0.10 lots on gold is not the same exposure as 0.10 lots on a currency pair. The formula still works. Replace the pip value with the money 1.00 lot gains or loses when price moves $1, and measure your stop in dollars of price.
As an illustrative example, say 1.00 lot of gold is 100 ounces. A $1 move is then $1 × 100 = $100 per lot. With $50 at risk and a stop $5 away, the stop costs 5 × $100 = $500 on 1.00 lot, so $50 ÷ $500 = 0.10 lots.
Before your first trade on a new symbol, read its contract size. Then work out what your stop costs at the smallest lot. If that number is already above your money at risk, the symbol is too large for the account.
Lot size mistakes that inflate your risk
- Using one fixed lot on every trade. A 50-pip stop at the same lot risks twice as much as a 25-pip stop.
- Mixing up lots and units. Some platforms ask for units, so typing 1 buys one unit, not 100,000.
- Sizing from the balance you hope to have. Use the current balance, including recent losses.
FAQ
Does higher [leverage](/glossary/leverage) let me trade a bigger lot size?
It lowers the margin a trade needs, so your platform will accept a bigger lot. It does not change what a pip is worth. Size the trade from your stop, then use leverage only to check that the margin fits.
Can I change the lot size after a trade is open?
You cannot edit the lot on an open trade. You can close part of it to cut the size, or place a second order to add. Adding raises your total risk, so run the formula again first.
Should I include the spread and [commission](/glossary/commission) in my lot size?
Yes. You buy at the higher price and sell at the lower one, so a trade starts a little behind and the stop is hit a little sooner than the chart suggests. Add the spread in pips to your stop distance. If your broker charges a commission, subtract it from your money at risk before you divide.