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As a reminder the course is aimed for complete beginners.
I tried to keep the lessons short and to the point giving out clear examples
and videos where required.
Lesson 12. Forex Lots
By now we know what a pip is, the bid and ask prices and the spread.
Now it is time to learn what lots are.
So now we know that the broker is lending us money to trade based on the leverage settings.
But how much money can I trade per trade?
This is measured in units and there are 3 types:
Lot equivalent to 100,000 units.
Mini Lot equivalent to 10,000 units.
Micro Lot equivalent to 1,000 units.
So when you enter a trade in EUR/USD and the prices are set as 1.3075 / 1.3078,
the following is what is happening in the market:
Trade of 1 Lot (1), you actually entered the trade with 100,000 Euros
Trade of 1 Mini Lot (0.1), you actually entered the trade with 10,000 Euros
Trade of 1 Micro Lot (0.01), you actually entered the trade with 1,000 Euros
Further to our leverage example, if you have an account of $250, with a leverage of 1:100,
you are actually trading with $25,000.
So can you enter a trade with 1 lot? Of course not.
1 lot is $100,000, and you only have $25,000.
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Thanks For Reading,
@lordoftruth
If you missed to read my
previous posts from the series of Forex Education Center
You will find it in the down list: