Like any other form of trading, lot sizes are important and understanding them is necessary to make profits and get the maximum leverage out of them. You also need to understand how leverage works and how to maximize it. Different sized lots can vary in the kind of returns they can get.

You can trade the normal lot size which is usually worth $100,000 and if it’s a 1:100 leverage, it means that you are getting a credit to control $100,000 for your $1000. Most of the Forex brokers open an account with $10,000 where you can trade in normal lots. Minimum trade will be one lot.

For every paper you gain, there is a $10 profit on 1:100 leverage, not the pip can be a positive or negative move in your currency. So if it moves against you then you loose $10. Both aspects of this should be learned and known before getting into such trades. A lot of markets swing around 100+ pips in a day where you can gain or lose as per your transactions. So you have to be really careful in buying and selling the currency in bigger lots.

Besides the normal lots there are mini lots, a mini lot is worth $10,000 which means the leverage is about 1:40. There are Micro lots as well where Forex trading is done at 1:4 leverage. It all depends on how much money you put in the market safely without taking unnecessary risks. Micro lots are a good option to learn about the trades and how they work. When you get a good experience making gains on small lots you can always try for the bigger ones. Small lots also give you an opportunity to learn about market swings and adjusting your mind and selling decisions according to them. Learning about lot sizes can help you gain good knowledge about the market without much risk.