To trade in forex market, it’s important to know about Forex lot size as a base of volume. When you want to trade for first time, once you open your platform and decide to trade on your favorite instrument, the first thing that you see is volume. What’s the volume? How can we specify it?
Like every things that you buy or sell, we should specify volume.
For example, we want to buy tomato, we tell shopper please give me 2 kilo tomato. Or 100 ounce of Gold, or 1000 barrels of oil, or 1000 bushel of wheat, or every thing. We determine this amount by lot size.
What about currency market? Please Imagine that you purchased 1 lot EUR/ USD, How much money do you have?
100,000$
In other word, when you trade 1 lot EUR/ USD. You buy 100000$ What about when you buy 1 lot EUR / GBP, You buy 100000 GBP USD/ JPY, 100000 JPY USD/ CAD, 100000 CAD LOT size in currency is 100000of the base currency. EUR/USD, USD is the base currency. What’s the value of each pip per lot? For example we buy 1 lot EUR/ USD at 1.1923, and it moved 1 pips, It’s simple. We calculate the value of 1 pip
0.0001/1.1924=0.0000838
Multiple by 1 lot
000838*100000=8.38 EUR per pip
38*1.1924=9.99$
What about USD/JPY, At 110.45
- 01/ 110.45=0.0000905
- Then, 0.0000905*100000=05$
Is it obvious? Because it’s based on USD, and there is no need to convert to USD It’s the value of the one pip per lot… It has 3 simple steps
- Recognize pip value
- Multiple by position size
- Convert to USD
What about other lot size in Forex market?
- 1-lot gold= 100 ounce of gold
- 1-lot oil= 1000 barrel
- 1-lot dow jones= 10 contract of dow jones
- 1-lot Silver = 5000 ounce of Silver
- It’s simple , it’s the basic term about primary knowledge.
According to this lesson, the value of 1 pip per lot is almost 10$ There is no need to calculate these items but the platform itself calculate it. however, we have to know for our own knowledge Other For gold we specify value of pip
0.1/1320=0.000075757
calculate the value of each ounce.
0.00007575*100=0.007575
0.007575*1320=9.99
