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Lot size is the amount of a currency pair you buy or sell in one trade. It decides how much each price move is worth to you – and therefore how much you can gain or lose. Getting lot size right is the most practical skill a new forex trader can learn, and it only takes simple maths.
This guide explains lot size in forex, what a pip is, how to work out pip value, and how to use a forex lot size calculator to size every trade by the amount you are willing to risk. You can try the numbers yourself on Xellion's free position size calculator and pip calculator.
What is lot size in forex?
Currencies are traded in standard blocks called lots. The common sizes are:
| Lot type | Units of base currency | Volume in MT5 | Approx. value of 1 pip on EUR/USD |
|---|---|---|---|
| Standard lot | 100,000 | 1.00 | $10 |
| Mini lot | 10,000 | 0.10 | $1 |
| Micro lot | 1,000 | 0.01 | $0.10 |
So if you buy 1.00 lot of EUR/USD, you are buying €100,000 worth of the pair. With leverage you do not need €100,000 in your account – only the margin – but your profit or loss is calculated on the full €100,000.
That is why lot size matters more than almost anything else: the same price move can be a small loss on 0.01 lot and a large loss on 1.00 lot.
What is a pip in forex?
A pip is the standard unit for measuring price moves in a currency pair.
- For most pairs (EUR/USD, GBP/USD, AUD/USD), 1 pip = 0.0001 – the fourth decimal place.
- For pairs quoted in Japanese yen (USD/JPY, EUR/JPY), 1 pip = 0.01 – the second decimal place.
- Many platforms show one extra digit, called a pipette (a tenth of a pip).
Example: if EUR/USD moves from 1.0850 to 1.0875, it has moved 25 pips.
So the short answer to “what is pip in forex?” is: the smallest standard step in a quoted price, used to measure moves, spreads, stop losses and profit targets in a way that works the same across every pair and every account size. Our guide what is a pip goes deeper.
Spreads are also quoted in pips. On Xellion, spreads start from 0.9 pips on the Standard account and from 0.1 and 0.0 pips on the Raw Spread and Zero Spread accounts (which charge a commission instead).
How to calculate pip value
Pip value tells you how much one pip is worth for your lot size. The formula is:
Pip value = (pip size ÷ exchange rate) × units traded
When the US dollar is the second currency in the pair (EUR/USD, GBP/USD, XAU/USD), it is simpler: the pip value is already in dollars.
- EUR/USD, 1.00 lot: 0.0001 × 100,000 = $10 per pip
- EUR/USD, 0.10 lot: 0.0001 × 10,000 = $1 per pip
- EUR/USD, 0.01 lot: 0.0001 × 1,000 = $0.10 per pip
For USD/JPY at 150.00, 1.00 lot: (0.01 ÷ 150.00) × 100,000 = about $6.67 per pip.
You do not need to do this by hand every time – a forex calculator such as Xellion's pip calculator does it instantly – but understanding the formula helps you sense-check any number you see.
Forex lot size calculator: size trades by risk
A common approach is to start from how much you are prepared to lose on one trade, not from how much you hope to make. A forex lot size calculator (also called a position size calculator) uses three inputs:
- Account balance – for example $500.
- Risk per trade – many traders use 1–2% of the balance. 1% of $500 = $5.
- Stop loss distance – how many pips away your stop loss is, for example 25 pips.
Then:
Lot size = risk amount ÷ (stop loss in pips × pip value per 1.00 lot)
Worked example on EUR/USD:
- Risk amount = $5
- Stop loss = 25 pips
- Pip value per 1.00 lot = $10
- Lot size = 5 ÷ (25 × 10) = 0.02 lots
So with a $500 account, a 1% risk and a 25-pip stop, the size is 0.02 lots. If the stop loss is hit, you lose about $5 – plus spread and any commission.
| Balance | Risk % | Risk amount | Stop loss | Lot size (EUR/USD) |
|---|---|---|---|---|
| $100 | 2% | $2 | 20 pips | 0.01 |
| $500 | 1% | $5 | 25 pips | 0.02 |
| $1,000 | 1% | $10 | 50 pips | 0.02 |
| $2,000 | 2% | $40 | 40 pips | 0.10 |
Xellion's position size calculator runs this formula for any pair and account currency.
Lot size for gold (XAU/USD)
Gold uses the same idea, but the contract is quoted in ounces rather than currency units. On Xellion, as at many brokers, 1.00 lot of XAU/USD is 100 troy ounces, so a $1 move in the gold price is worth about $100 per lot, and $1 per 0.01 lot. The contract details are on the gold price page.
Example: with gold at about $3,900, a 0.01 lot position moving $10 is roughly a $10 gain or loss. Gold can move tens of dollars in a day, so small lot sizes are the norm for beginners. Read more in our guide on how to trade gold online.
Lot size, leverage and margin
Leverage lets you open a position larger than your balance; margin is the amount set aside to keep it open.
Required margin = (lot size × contract size × price) ÷ leverage
Example: 0.10 lot EUR/USD at 1.0850 with 1:100 leverage → (0.10 × 100,000 × 1.0850) ÷ 100 = about $108.50.
Xellion offers leverage of up to 1:2000 depending on account and country, and the margin calculator shows the margin for any size. Higher leverage reduces the margin needed – it does not change your pip value or how much you lose per pip, and it magnifies losses as well as gains. Your loss per pip is still decided by lot size.
How to set lot size in MT5
- Open the pair in MetaTrader 5 and tap New Order.
- In Volume, enter the lot size you calculated (e.g. 0.02).
- Set your Stop Loss at the price that matches your stop distance.
- Optionally set a Take Profit.
- Check the order details and place the trade.
New to MT5? Our MT5 download and login guide shows how to log in to the Xellion-Live server on phone, PC or web.
Common lot size mistakes
| Mistake | What happens | Fix |
|---|---|---|
| Same lot size on every trade | Risk changes with every stop distance | Recalculate for each trade |
| Choosing lots from leverage | Positions far too large | Size from risk, not from available margin |
| No stop loss | No defined maximum loss | Set a stop on every order |
| Ignoring JPY and gold differences | Pip value is not $10 per lot | Use a pip calculator |
| Forgetting spreads and commission | Real loss is bigger than planned | Add costs to your risk |
Practise first, then go live
The fastest way to get comfortable with lot size is to practise on a free demo account. Place a few 0.01, 0.10 and 1.00 lot trades and watch how the profit and loss changes per pip.
When you are ready:
- Choose Standard ($50 minimum), Raw Spread ($250) or Zero Spread ($750) on the accounts page.
- Deposit by UPI from $50 – see the funding page. Bank withdrawals are listed at about 15–20 minutes.
- Trade on the Xellion app, MT5 or WebTrader – see platforms.
New to forex in general? Start with what is forex trading and how to start forex trading in India.
FAQ
What is lot size in forex?
The amount of a currency pair you trade. A standard lot is 100,000 units, a mini lot 10,000 and a micro lot 1,000 (0.01 in MT5).
What is a pip in forex?
The standard unit of price movement: 0.0001 for most pairs and 0.01 for yen pairs.
How much is 1 pip worth on 0.01 lot?
On EUR/USD and other pairs quoted in US dollars, about $0.10 per pip on 0.01 lot.
How do I use a forex lot size calculator?
Enter your balance, the percentage you want to risk and your stop loss in pips. It returns the lot size that keeps your loss to that amount if the stop is hit.
What lot size do beginners usually use?
Small sizes such as 0.01 lot, chosen so that a stop loss costs only 1–2% of the account.
Does leverage change pip value?
No. Leverage changes the margin you need; pip value depends only on lot size and the pair.
This article is general information and education, not investment advice. CFDs are complex instruments and carry a high risk of losing money rapidly due to leverage.
