Lots: standard, mini and micro
Lot size as a fraction of the base currency
A lot is a count of units of the base currency. In AUD/USD the base currency is AUD, so one standard lot is 100,000 Australian dollars, one mini lot is 10,000, and one micro lot is 1,000. The platform shows this count as a decimal: 1.00, 0.10 and 0.01. The quote currency, here USD, is what the pip value is first counted in, and it is converted back to Australian dollars afterwards.
The decimal is not a percentage of your account. It is a multiple of a fixed unit count, so 0.10 lot is always 10,000 units of the base currency no matter how much money sits in the account. Two people with different balances choosing 0.10 lot control the same 10,000 units. What differs is how much of each person's balance that position puts at risk.
Because the count is fixed, lot size is the one part of the ticket you can calculate in advance. Price moves are not under your control and the spread is set by the broker, but the number of units is chosen by you before the order is sent. That makes it the main lever for matching a trade to the money you are prepared to lose.
A useful way to read the ticket is to treat the decimal as a multiplier of 1,000 units. At 0.01 lot the multiplier is one, giving 1,000 units. At 0.05 lot it is five, giving 5,000 units. At 0.20 lot it is twenty, giving 20,000 units. Reading it this way keeps the unit count in view instead of the small-looking decimal.
Pip value across the three sizes on AUD/USD
One pip on AUD/USD is a move of 0.0001 in the price. On 100,000 units, that move is 100,000 multiplied by 0.0001, which is 10 units of the quote currency, USD. On a mini lot of 10,000 units it is 1 USD, and on a micro lot of 1,000 units it is 0.10 USD. These are the figures before conversion into Australian dollars.
To express them in Australian dollars, divide by the AUD/USD rate, which is about 0.6640. Ten USD divided by 0.6640 is about A$15.06 per pip on a standard lot. One USD divided by 0.6640 is about A$1.51 on a mini lot, and 0.10 USD divided by 0.6640 is about A$0.15 on a micro lot. The rate used here is approximate, so the converted figures move as the rate moves.
The step between sizes is a factor of ten each time. A mini lot is one tenth of a standard lot, so its pip value is one tenth as large. A micro lot is one tenth of a mini lot, so its pip value is one tenth again. This is why the three sizes are described as a ladder rather than as separate products.
Brokers differ in how they round these pip values and in the spread they quote, and some charge a commission or a swap on top. Those costs are not included in the figures above. A broker's own calculator will show its version of the pip value, and it may differ slightly from the arithmetic here.
Choosing a size before the order is sent
The order of decisions matters more than the arithmetic. First decide the amount of money you are willing to lose on the trade, in Australian dollars. Then decide where the stop will sit, in pips. Divide the first number by the second to get the money per pip, and from that work out the lot size. Doing it in this order stops the lot size from being chosen by habit.
A worked example uses the same rate of about 0.6640. A risk of A$12 with a 40 pip stop gives A$0.30 per pip. A micro lot is about A$0.15 per pip, so A$0.30 per pip is 0.02 lot, which is two micro lots. The position controls 2,000 units, and a 40 pip move against it costs about A$12.
The result will not always land on a round decimal. If the money per pip falls between two available sizes, the smaller of the two keeps the risk inside the limit. Some platforms allow step sizes smaller than 0.01 lot and some do not, and the minimum varies between brokers. The calculation gives the ceiling, not a target to reach.
ASIC requires brokers to offer negative balance protection to retail clients, which means a loss should not exceed the funds in the account. That protection does not prevent a position from being closed out when the money runs low. A size that keeps the risk small on each trade is what limits how often that can happen.
Brokers also differ in the minimum deposit, the payment methods they accept, and the time a deposit takes to arrive. In Australia these commonly include PayID, BPAY and cards, but the mix varies between brokers. None of that changes the pip value, which depends only on the units and the exchange rate.
Three lot sizes on a A$500 account
| Step | Amount | Note |
|---|---|---|
| Standard lot | 1.00 lot, 100,000 units of AUD/USD | The base size the platform shows as 1.00 |
| Pip value at 1.00 lot | A$10 per pip | One pip is 0.0001, so 100,000 x 0.0001 = 10 units of the quote currency, converted at the current rate |
| Mini lot | 0.10 lot, 10,000 units | One tenth of a standard lot |
| Pip value at 0.10 lot | A$1 per pip | One tenth of A$10 |
| Micro lot | 0.01 lot, 1,000 units | One hundredth of a standard lot |
| Pip value at 0.01 lot | A$0.10 per pip | One hundredth of A$10 |
| Risk on a 20 pip stop at 1.00 lot | A$200 | 20 x A$10 |
| Risk on a 20 pip stop at 0.10 lot | A$20 | 20 x A$1 |
| Risk on a 20 pip stop at 0.01 lot | A$2 | 20 x A$0.10 |
Brokers differ in how they round pip values, in the spread they quote, and in any commission or swap charged on top. The figures above use the AUD/USD rate of about 0.6640 and do not include those costs.
Doing it once, step by step
The aim is to turn a risk amount in Australian dollars and a stop distance in pips into a lot size, using AUD/USD at about 0.6640. Work through the steps in order and write each figure down before moving to the next.
- 01
Write down the risk amount
Choose the number of Australian dollars you are willing to lose if the stop is hit. Use a figure that leaves the rest of the account untouched. This number is the first input and it does not come from the chart.
- 02
Write down the stop distance in pips
Decide where the stop sits and count the distance in pips. On AUD/USD one pip is 0.0001, so a move from 0.6640 to 0.6600 is 40 pips. The stop distance is the second input.
- 03
Divide risk by pips
Divide the risk amount by the number of pips to get the money per pip. A risk of A$12 over 40 pips gives A$0.30 per pip. This figure is the budget for each pip the price moves.
- 04
Convert the pip value to a lot size
A micro lot is about A$0.15 per pip at a rate of 0.6640, so A$0.30 per pip is 0.02 lot. Check the result against the platform's own pip value, which may be rounded differently. If the figure falls between two sizes, use the smaller one.
- 05
Check the size against the account
Multiply the pip value of the chosen size by the stop distance to confirm the loss. At 0.02 lot and 40 pips the figure is about A$12. If it is larger than the amount from the first step, reduce the size and check again.
- 06
Enter the size on the ticket
Type the decimal into the lot field before sending the order, and read it back once. Confirm the stop is set at the distance used in the calculation. The size and the stop together set the risk, so both need to match the figures you wrote down.
The mistake most people make here
The common mistake is to open a standard lot because the number looks small on the ticket, without working out what one pip costs. At 1.00 lot a 20 pip stop is A$200, which is 40 per cent of a A$500 account, so a short run of losses can end the account. The fix is to decide the money you are willing to lose first, then divide by the pip value to find the lot size. On A$500, a A$10 risk on a 20 pip stop is 0.05 lot, which sits between mini and micro. ASIC requires brokers to offer negative balance protection to retail clients, but that does not stop a position from being closed out.Check yourself
AUD/USD is at 0.6640. What is one pip worth on 0.20 lots?
0.20 lots is 20,000 units. One pip is 0.0001, so 20,000 x 0.0001 = 2 units of the quote currency, which converts to about A$2 per pip.
A trade risks A$15 with a 30 pip stop. What lot size does that imply?
A$15 divided by 30 pips is A$0.50 per pip. Since a standard lot is A$10 per pip, A$0.50 is 0.05 lot.
How many micro lots make one standard lot?
One hundred. A micro lot is 0.01 lot and a standard lot is 1.00 lot, so 1.00 divided by 0.01 is 100.
Questions that come up next
What is a lot on the platform ticket?
A lot is the number of units of the base currency that one trade controls. On the ticket it shows as a decimal such as 1.00, 0.10 or 0.01. That decimal is a multiple of a fixed unit count, not a share of your account. So 0.10 lot always means 10,000 units of the base currency, whatever your balance.
How do I work out the pip value for a lot size I have chosen?
Take the number of units, multiply by 0.0001, and you have the pip value in the quote currency. For AUD/USD, 20,000 units times 0.0001 is 2 USD. Divide by the AUD/USD rate, about 0.6640, to get roughly A$3 per pip. The rate moves, so the dollar figure moves with it.
Why does the same 20 pip move cost different amounts on different lot sizes?
Because the pip value scales with the number of units. A standard lot is 100,000 units, a mini lot is 10,000, and a micro lot is 1,000. Each step down divides the pip value by ten. So a 20 pip move costs ten times more on a standard lot than on a mini lot.
Can I choose a lot size that is not exactly 1.00, 0.10 or 0.01?
Many platforms allow steps between those, such as 0.05 or 0.20. The decimal is a multiplier of 1,000 units, so 0.05 lot is 5,000 units and 0.20 lot is 20,000 units. Check what your broker offers, because the smallest step varies. The unit count is what matters, not the label.
Does negative balance protection mean I cannot lose more than I put in?
ASIC requires brokers to offer negative balance protection to retail clients, so your account balance should not go below zero from a position. But it does not stop a position from being closed out when margin runs short. You can still lose the money you have in the account. The protection covers the balance going negative, not the loss itself.
How do I pick a lot size from the money I am willing to lose?
Decide the amount you are prepared to lose on the trade, then divide by the pip value to get the lot size. If you risk A$15 with a 30 pip stop, that is A$0.50 per pip. Since a standard lot is about A$10 per pip, A$0.50 per pip is 0.05 lot. The result may sit between the standard sizes, which is normal.
The words used on this page
- lot
- A lot is the unit count for one trade. It is written as a decimal on the ticket, such as 1.00 or 0.01. The decimal multiplies a fixed number of units of the base currency.
- standard lot
- A standard lot is 100,000 units of the base currency. On the ticket it appears as 1.00. On AUD/USD, one pip on a standard lot is about A$15.06 at a rate of 0.6640.
- mini lot
- A mini lot is one tenth of a standard lot, so 10,000 units. On the ticket it appears as 0.10. Its pip value is one tenth of a standard lot's pip value.
- micro lot
- A micro lot is one hundredth of a standard lot, so 1,000 units. On the ticket it appears as 0.01. Its pip value is one tenth of a mini lot's pip value.
- pip value
- Pip value is the money that one pip of price movement is worth for your chosen lot size. It is first counted in the quote currency, then converted to Australian dollars. It changes as the exchange rate changes.
- margin
- Margin is the part of your account balance set aside while a position is open. It is not a fee. If the trade moves against you and margin runs short, the broker may close the position.
What to take away
- A lot is a count of units of the base currency, not a percentage of your account.
- Standard is 100,000 units, mini is 10,000, micro is 1,000, and each step down divides pip value by ten.
- Pip value in Australian dollars depends on the AUD/USD rate, which moves, so reconvert when the rate changes.
- Choose lot size by dividing the money you are willing to lose by the pip value, and check your broker's rounding, spread and any commission or swap.