Lot means a standard quantity of a financial instrument which is set by a regulatory body. Lots forex denotes the minimum quantity of shares that can be traded.
Types of Forex Lot:
Lots forex are divided into 4 types.
- Nano Lots:
Nano lot is a term used for the 1 currency unit. This is the smallest trade available. Nano lots allow the trader to begin with a small account. Low risk is associated with this type of trading.
- Micro Lots:
Micro lot is a term used for the 1, 000 unit trade. It is great size for the traders who do not have enough money to invest. Even though you can’t make a great fortune, you will not lose too much in trading micros. So, forex markets are fantastic places for trading.
- Mini Lots:
Mini term is a term which is used for the 10,000 unit trade. The traders should be capitalized before trading mini lots. One should have $1000 in his account for every mini lot he plans to open. It is a good trade size for the forex trader who has good capital.
- Standard Lots:
Standard lot is a term used for 100,000 unit trade. The traders should be prepared for large swings of gains and losses when they trade standard lots. Gains or losses can reach $1000 to $2000 or more on a regular day in forex markets. Having a larger account size is important to trade them seriously.
6 Most Tradable Currencies:
Forex trading is an act of buying and selling of currencies. So, currencies are main components of doing foreign exchange. To understand the variations of lots forex you need to understand the types of tradable currencies.
- S. Dollar:
U.S. dollar is the currency of a country which is known as the world’s largest economy. Just like any other currency, dollar is supported by economic fundamentals, GDP, and manufacturing and economic reports.
- European Euro:
Euro quickly became 2nd most traded currency in the world of forex. But against the USD, Euro appears as a slower currency compared to other currencies. On an average day, the base currency can be traded between 30-40 pips.
- Japanese Yen:
It’s the most used currency of Asia in forex markets. Many people view it as a representative of the underlying strength of Japan’s strong export economy. It is known in the forex markets for its function in the carry trade. Carry trade is a strategy in which a trader borrows money at low interest and uses it to buy a different currency at higher interest.
- British Pound
Pound comes 4th in forex markets. It is a reflection of the strength of British economy and political stability in the country.
- The Swiss Franc:
The currency of Switzerland, The Swiss Franc is a neutral currency. So, many traders see it as place of safety in the forex markets.
- The Canadian Dollar:
It is known as looni. Looni is the most important commodity currency. It moves with commodity market, specifically minerals, crude oil and precious metals etc.
Hopefully, you have got an idea of lots forex and currencies. Now do forex trading smartly and carefully. Happy trading!