Fx lot volume is the number of shares or contracts traded in a security or an entire market during a given period of time. Specifically, lots refer to specific amounts in which spot fx is traded in the past; while volume is the number of shares or contracts traded in a security or an entire market during a given period.
For the purpose of trading, a transaction is defined as an executed agreement between a buyer and a seller in the market. If a fx trader sells or buys some currency, it is considered a transaction; and each transaction is one count volume. So, in a week, if a trader carries out 12 transactions, it is said that the volume of the week is 12.
WHAT IS SPOT TRADING?
Spot trading is one of the transactions that can take place in the market. It is not a straight jacket kind of transaction as it has some unique features to it. Basically, any transaction at all has to do with the agreement to either buy or sell a currency. In the case of spot trading, two different parties of fx traders agree to buy one currency against selling another currency at an agreed time and price. The amount in which a spot fx was traded is called lots.
LOTS IN FOREX TRADING
A lot is the specific amount of a spot trade. Lots come in units, with the standard size being 100,000 units. Lots also come in other sizes as follows
- Mini lot size which consists of 10,000 units
- Micro lot size, which consists of 1,000 units
- Nano lot size, which consists of 100 units
In a currency pair, the change in the value of one currency in relative to the other is measured in percentage in point. This is very small and almost negligible when in small quantities. Therefore, to see some significance in percentage in point when there is a change in the value of a currency against another in a currency pair, one has to trade in large quantities. The same goes for trading lots in the market. One has to put in a significant amount of resources into a trade in order to see significant turnover.