Standard lot
Family I · Instruments
Not to be confused with lot, lot size, micro lot.
Standard lot is a unit of trade size that represents a fixed quantity of the underlying instrument. In the spot foreign exchange market it conventionally denotes 100,000 units of the base currency, though the exact quantity varies by instrument, broker and market. It is the baseline against which smaller sizes such as mini lots, micro lots and nano lots are defined.[1]
Size and pip value
A standard lot fixes the notional quantity of a position. For most currency pairs quoted to four decimal places, one pip on a standard lot equals 10 units of the quote currency; for pairs quoted to two decimals, such as JPY crosses, one pip equals 100 units of the quote currency. These figures follow from the contract size and are not set by the broker.
Because pip value scales linearly with size, a standard lot carries ten times the pip value of a mini lot and one hundred times that of a micro lot.
Worked example
Variation across markets
The 100,000-unit convention is specific to spot forex. In other markets a standard lot is defined differently: for example, a standard lot of gold is often 100 troy ounces, and a standard lot of a stock or ETF is a round number of shares set by the exchange or broker. Contract specifications, minimum trade sizes and margin requirements vary by instrument, broker and regulator, so the quantity attached to a standard lot should always be confirmed from the contract specification rather than assumed.
Often confused with
- lot
- A lot is the generic term for any trade quantity, while a standard lot is one specific, conventionally sized lot; the visible sign is that a standard lot always carries a defined contract size such as 100,000 units.
- lot size
- Lot size is the numerical quantity of a position, whereas a standard lot is a named size category; the visible sign is that lot size can be any figure, such as 0.37, while a standard lot is a fixed benchmark.
- micro lot
- A micro lot is one tenth of a standard lot, or 10,000 units in forex; the visible sign is the smaller contract size and correspondingly smaller pip value.
See also
References
- ↑ Contract specifications published by the broker or exchange for each instrument. Lot sizes, tick sizes and pip values are set per instrument and differ between venues; read the specification for the symbol you trade.