How to Calculate Lot Size in Forex
BY Created by TIOmarkets
|mayo 14, 2025Understanding how to calculate lot size in forex trading may seem confusing for beginner traders, but it’s a critical aspect of risk management that can not be overlooked.
Your lot size directly impacts how much you could potentially profit or lose on a trade and this can affect the overall performance of your trading strategy. So in this article, we'll explore how to calculate lot size in forex, including the pip values, to help you trade responsibly.
Continue reading to learn more about the essential concepts and learn how to minimize trade execution mistakes.
How to Calculate Lot Size in Forex
There are various methods to determine the lot size when trading forex. Some traders refer to the average true range (ATR) to gauge price volatility, while others calculate the distance between their entry price and their stop loss. Based on either of these measurements, they adjust their lot size according to their risk tolerance.
Regardless of the method you choose, grasping the concept of lot size in forex trading and how it relates to the value of a pip is crucial for managing risk. The knowledge contained in this article is essential to ensure you select the appropriate volume or lot size before executing any trade.
What is the lot size in Forex?
The lot size in forex is the amount of currency you will be buying or selling and is usually expressed as units of the base currency.
- One standard lot (1.0 lots) represents 100,000 units of the base currency.
- One mini lot (0.1 lots) represents one tenth of a lot, or 10,000 units of the base currency.
- One micro lot (0.01 lots) represents one hundredth of a standard lot or 1,000 units of the base currency.
- One nano lot (0.001 lots) represents one thousandth of a standard lot or 100 units of the base currency.
Lot sizes in forex trading and their pip values
| Contract size | MT4 / MT5 volume | Units of base currency | PIP value (USD) |
| Standard lot | 1.0 | 100,000 | 0.0001 = $10 |
| Mini lot | 0.10 | 10,000 | 0.0001 = $1 |
| Micro lot | 0.01 | 1,000 | 0.0001 = $0.10 |
| Nano lot | 0.001 | 100 | 0.0001 = $0.01 |
For currency pairs where the base currency is not your account base currency, the pip value will require additional conversion based on the relevant exchange rates. For currency pairs that include the JPY, the pip value is in the 2nd decimal place (0.01).
The lot size calculation in forex can vary
The lot sizes outlined above are standard in forex trading but it is important to check the contract specification on your trading platform. The number of units traded per lot may vary, particularly when trading exotic currency pairs and some brokers might not allow nano lot trading.
Understanding the contract specification in forex trading
The specific details of how to calculate the lot sizes mentioned above can be found in the contract specification. Here’s how you can find it inside the MT4 or MT5 trading platform.
- Right-click on any symbol in the market watch window.
- Select “Specification” from the pop-up menu that appears.
An example is included below and the highlighted rows are particularly important for understanding and calculating the lot size in forex.
EURUSD contract specification
As you can see from the contract specification above, the contract size in forex for the EURUSD is 100,000 units of the base currency (EUR). Which means that whenever you select 1.0 lots in the volume field on the MT4 or MT5 trading platform, you will be buying or selling 100,000 EUR.
Further down the contract specification sheet, you will see the minimum volume, maximum volume, volume step and volume limit information. The first two are self explanatory, they inform you what the minimum and maximum lot sizes are. In this case, the minimum volume is 0.01 lots, which is 1/100th of a standard lot (1.0).
If 1.0 lots is equal to 100,000 EUR, then a volume of 0.01 is 1,000 EUR. The maximum lot size or volume in forex when trading EURUSD on TIOmarkets trading platform is 20 lots or 2,000,000 EUR.
The volume step tells you the minimum increment or decrement you can enter on the trading platform. In this example, you can buy or sell in step increments of 0.01 lots or in other words, you can buy or sell from 0.01 lots, 0.02 lots, 0.03 lots, and so on up to the maximum volume or lot size.
The volume limit information indicates the maximum lot size you can trade across all open and pending orders in your trading account. In the example illustrated above, the maximum volume is 300 lots or 30,000,000 EUR.
How the lot size in forex trading affects pip values
As you have come to learn so far, the lot size in forex trading is the term used to describe the number of units that you are trading. The lot size is directly related to, and has a significant effect on the pip value. Which in turn, affects how much money you can potentially make or lose in the forex market.
As a rule, the smaller the lot size, the smaller the pip value is and vice versa. As a result, your risk and profit potential will be less compared to when you are trading larger lot sizes or a higher quantity of units.
How to calculate lot size in forex trading
When you begin trading forex, one of the most vital steps is determining how much you're willing to risk per trade. Understanding how to calculate lot size in forex trading helps you align your trade volume with your risk tolerance. So if you are stopped out, you do not lose more than you initially intended. (Not taking slippage into account)
Let’s suppose you're prepared to risk $100 on a trade and you have decided that your stop loss will be placed 100 pips away from your entry price. Using the formula below, you can easily calculate what the lot size should be to stay within your predefined risk tolerance.
Forex lot size calculation formula
Lot Size = Risk amount in USD / Stop loss in pips
Lot size = $100 / 100 pips
Lot size = $1 per pip
Lot size = 1 mini lot (or 0.10 lots)
Let’s consider another example:
Imagine the EURUSD is trading at 1.1000, and you’re willing to risk up to $250 on a long trade. You have also determined that your stop loss should be placed 50 pips away at 1.0950.
To calculate the lot size, first find the pip value that you should be trading by dividing the amount to risk by the distance of your stop loss in pips.
Lot Size = Risk amount in USD / Stop loss in pips
Lot size = $250 / 50 pips
Lot size = $5 per pip
Lot size = 5 mini lots (or 0.50 lots)
It is as simple as that and we also have a forex lot size calculator to help simplify the process.
Why lot size is so important in forex trading
The reason why knowing how to calculate lot size in forex trading is so important, is because it directly affects how much you could potentially profit or lose on a trade. The higher your risk tolerance and amount to risk, the higher your lot size can be. Conversely, the lower your risk tolerance and amount to risk, the lower your lot size should be.
Lot sizes in forex trading can vary between currency pairs so when trading forex, you first need to know how many units are in one standard lot and the corresponding pip value. This information is available on the contract specifications sheet inside the MT4 and MT5 trading platform. When you know this, calculating what lot size you should be trading in forex will be straightforward.
FAQ’s
Why is calculating lot size in forex so important?
Calculating lot size in forex trading is crucial for effective risk management, as it determines the potential profit or loss on the trade. By calculating the lot size you should be trading based on your risk tolerance, you can control your exposure and limit the losses on any single trade.
Can I change my lot size after placing a trade?
You cannot change the lot size of an open trade on a hedging account, but you may be able to on a netting account. If you wish to adjust your lot size once the trade has been executed, you will need to close the current trade or open new ones to achieve the desired lot size.
What happens if I use too large of a lot size?
Using too large of a lot size relative to your account balance can significantly increase your potential to profit, as well as significantly increasing the risk of loss.
Does the lot size affect the spread or commissions I pay?
The lot size does not directly affect the spread unless the volume is large enough to absorb the available liquidity in the market. The lot size does affect the commission you will pay and this also depends on your account type. Commissions are charged pro rata, per round turn lot, so the higher the lot size traded, the higher the commission will be.
How do I know what my maximum lot size should be?
Your maximum lot size should be determined by your risk tolerance and the size of your account balance. The trading community suggests risking a small percentage of your account balance on any single trade idea (e.g. 1-3%). You should calculate the lot size that aligns with your risk tolerance and the distance you intend to place your stop-loss from your entry price.
Are lot sizes the same for all currency pairs?
Standard, mini, micro and nano lots are common for most currency pairs, but they can vary when exotic currencies are involved. You should check the contract specification for the symbol you are trading to confirm the standard lot size.
Is there a difference between volume and lot size?
On the MT4 or MT5 trading platform, the volume field represents the lot size. A volume of 1.0 means 1 standard lot, 0.1 means 1 mini lot, 0.01 means 1 micro lot and 0.001 means 1 nano lot. Volume and lot size are interchangeable terms that represent the quantity being bought or sold.
Where can I find the contract specifications for each currency pair?
You can find the contract specifications for each symbol in the MT4 or MT5 trading platform. Right-click on the currency pair in the Market Watch window and select "Specification" from the menu. This will provide details about the standard contract size, minimum and maximum trading volumes, and other relevant trading information.
Learn how to calculate lot size in other markets
- How to calculate lot size for commodities
- How to calculate lot size for stocks
- How to calculate lot size for indices
- How to calculate lot size in crypto
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