What are Lot in Forex

LESSON NO 19

What are Lot in Forex:      Lot express the value in forex.  There are three types of lots:

Ø  Micro Lot  :  It means that one pip is equal to 10 cents, in trading you will gain profit or met loss 10 cents per pip.

Ø  Mini Lot  : In mini lot one pip is equal to 1 dollar which means that during the course of trading you will earn or loose one dollar for every pip.

Ø  Standard Lot  : In Standard Lot one pip is equal to 10 dollars so if you have earned one pip you have earned 10 dollars and if you have lost one pip you have met a loss of 10 dollars.

What are Types of Order in Forex:       In forex trading there are mainly two types of orders:

Ø  Instant Execution / Market Order           :           Trading on Current Market rates is called market order.  If you are buying or selling any pair on the rates shown on your platform it is called market order

Ø  Pending Order        :           There are two sub categories of Pending Orders:

Ø  Stop Orders       :           In Stop orders you buy on higher rates than current market rats of sell on lower rates than current market rates.  For example if current price of EUR/USD is 1.3060 and you want that if it reaches at 1.3040 and you sell then you have two options either stick in front of your computer / laptop and stick to screen to watch the price variations carefully or place a stop order and when price will reach at 1.3040 your order will be executed and your trade will automatically be opened.

Ø  Limit Orders      :           In limit orders we buy below current market rate or sell above current market rates.  For example if current price of EUR/USD is 1.3060 and you want to buy at the price of 1.3030 then you will place a pending Limit order and as the price will hit 1.3030 you buying trade will be automatically executed and opened.