Lots: standard, mini and micro
What you learn in 3 minutesA lot is the size of one trade. It decides how much money each pip of movement is worth to the account. Standard, mini and micro lots are the same instrument in three sizes: 100,000 units, 10,000 units and 1,000 units.
Pip value on three lot sizes at EUR/USD 1.0850
| Step | Amount | Note |
|---|---|---|
| Standard lot | 100,000 units | the base size for one trade |
| Mini lot | 10,000 units | one tenth of a standard lot |
| Micro lot | 1,000 units | one hundredth of a standard lot |
| Pip value, standard lot | 10.00 USD | 100,000 x 0.0001, in the quote currency |
| Pip value, mini lot | 1.00 USD | 10.00 divided by 10 |
| Pip value, micro lot | 0.10 USD | 10.00 divided by 100 |
| Pip value, standard lot in KSh | about KSh 1,290 | 10.00 USD converted at the rate the broker quotes |
| Pip value, mini lot in KSh | about KSh 129 | one tenth of the standard figure |
| Pip value, micro lot in KSh | about KSh 12.90 | one hundredth of the standard figure |
| Deposit | about KSh 64,500 | 500 dollars at the same rate |
| Risk on a 20 pip stop, standard lot | about KSh 25,800 | 20 x 1,290, which is 40 per cent of the deposit |
| Risk on a 20 pip stop, mini lot | about KSh 2,580 | 20 x 129, which is 4 per cent of the deposit |
| Risk on a 20 pip stop, micro lot | about KSh 258 | 20 x 12.90, which is 0.4 per cent of the deposit |
The dollar to shilling rate changes daily, and each broker sets its own rate, spread, commission and minimum lot size. Some brokers allow 0.01 lots, some start at 0.10. Check the contract specification on the platform before you trade, and fund the account by M-Pesa or bank transfer.
The mistake people make here
The common mistake is to open a standard lot on a small account because the platform makes it one click. On a KSh 64,500 deposit, a 20 pip stop on a standard lot risks about KSh 25,800, which is 40 per cent of the account in one trade. Do the pip value sum first, then choose the smallest lot that keeps a single loss small. If the platform allows 0.01 lots, use it while you are learning, and remember that a CMA-regulated broker must still show you the costs before you trade.Check yourself
EUR/USD is at 1.0850. One pip on a mini lot is 1.00 USD. What is the pip value in KSh if the broker quotes KSh 129 to the dollar?
1.00 x 129 = KSh 129 per pip.
You hold 0.10 lots and the price moves 20 pips against you. What is the loss in KSh at KSh 129 per dollar?
0.10 lots is a mini lot, so one pip is 1.00 USD, or KSh 129. 20 x 129 = KSh 2,580.
A standard lot is 100,000 units. How many micro lots is that?
100,000 divided by 1,000 = 100 micro lots.