UK Forex Lot Sizes

UK Forex Lot Sizes

Something you need to consider when you trade UK forex online is the lot sizes.  Your risk management plan should include the lot sizes that you are going to use.  There are three different lot sizes that you can get and that you should know about.  You should not simply use the smallest lot size because it decreases the risk you face.  It may not actually be the best option for you when it comes to trading.  You also have to consider what lots you broker allow you to trade.

UK Forex Micro Account Lot Sizes

As the name may suggest micro lots are the smallest lot sizes offered by forex brokers.  A micro lot has 1000 units of your funding currency.  This means that if you have US dollars in your account then a micro lot consists of $1000.  Micro lots are the ideal lot size for any new trader.  The small size ensures that you will not lose all of your money on a trade and it reduces the risk involved in trading.  When trading with micro lots a single pip will be equivalent to 0.1 units of your account currency.

The Mini Account Lot Sizes

Before the advent of the micro lot the standard for all new traders was the mini lot.  Mini lots are actually 10 times larger than the micro lot.  Each lot will have 10000 units of the account base currency.  This means that each pip with these lots is worth 1 account currency unit.  As you are able to trade in micro lots mini lots are no longer the ideal for new traders.  If you are a new trader wanting to use mini lots you should have a fair amount of capital.  If you are going to use mini lots it is recommended that you have a starting capital amount of 2000 currency units.

The risk associated with this lot size is greater than with micro lots.  The reason for this is that the market can move around 100 pips each day.  This means that on a trade you could be playing with 100 units of your account currency.  This sort of loss can be a deal breaker for any new trader who does not have a lot of capital.

The Standard Account Lot Sizes

Standard lots are the largest lot available for trade on the UK forex market.  You should only trade with these lots once you have a lot of experience and have a large account balance.  The standard lot is 10 times bigger than the mini lot which means each lot is 100,000 units of currency.  A single pip with this lot is equal to 10 units of currency.  This means that you can lose 100 units of currency when the market moves 10 pips.

The capital amount you should have to use this lot size is around 25000 units of currency.  If you do not have this amount you will have to use large amounts of leverage which increases the risk of your trade.  The risk with this lot size is the greatest as each pip is worth a fair amount of money.

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