Trading mechanics
Micro lot
1,000 units of the base currency, one hundredth of a standard lot. Worth roughly $0.10 per pip on most dollar-quoted pairs, it is the smallest size most accounts can trade.
GFN’s figure
On a $5,000 GFN 2 Step account - the cheapest entry at $22 - the 5% daily loss limit is $250, which is 2,500 pips at one micro lot.
In detail
Micro lot,explained
Micro lots make a small account tradeable at a sensible risk per trade. On a $5,000 account, risking 0.5% is $25 - which is a 50-pip stop at five micro lots and completely impractical in standard lots.
They are also the right tool for scaling into a position, because the increments are small enough that adding does not transform the risk profile in one step.
Related
Terms thatcome with it
Most rules only make sense next to the ones they interact with. These are the entries this one depends on.
Lot
The unit position size is measured in. One standard forex lot is 100,000 units of the base currency; mini and micro lots are one tenth and one hundredth of that.
Mini lot
10,000 units of the base currency, one tenth of a standard lot. On most dollar-quoted pairs it is worth about $1 per pip, which is the size most small evaluation accounts actually trade.
Standard lot
100,000 units of the base currency - the full-size forex contract. On most dollar-quoted pairs it is worth roughly $10 per pip, which makes it the reference every other size is scaled from.
Position size
How many lots a trade is placed in. It is calculated from the dollar amount being risked and the stop distance, not chosen first - which is the reverse of how most traders approach it.
Account size
The virtual balance an account is denominated in. It scales every percentage rule into dollars, sets the fee, and determines how much a single pip of movement is worth to your objectives.
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