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. The different sized lots have kind of returns, so learning to handle well and trade effectively with any kind of lots can only make you better trader.
Many regular traders prefer to operate with normal lot size which is usually worth $100,000. Well, if it’s 1:100 leverage, it means that you are getting a credit to control $100,000 for your $1000. Most of the Forex brokers allow you to open an account with minimum $10,000 where you can trade in normal lots. Minimum trade of lots and the size of the lot depend on the broker that won you sympathy.
For every pip you gain, there is a $10 profit on 1:100 leverage. Sound easy but you have to know the market and stay updated with the most recent industry and financial news. And remember, if the pip moves against you then you lose $10. You will learn easily the aspects of currency trading, just don’t trust too much the market’s signal and don’t get into too risky trades while you are still new. A lot of currency pairs swing around 100+ pips in a day, so you can gain or lose many funds as per your transactions. So you have to be really careful in buying and selling the currency in bigger lots.
There are also mini lots besides the normal lots. The medium leverage of such kind of lots is 1:400. 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. They are top forex trading solution for beginners who want to taste the trill and dynamic of the market.
When you get a good experience of making gains on small lots then you can always try for the bigger ones. Small lots also give you an opportunity to learn about market swings and adjust your mind. You can improve your selling decisions according to your strategy with small leverage forex trading. So, try to operate with small lot sizes while you gain more experience and good knowledge.
It’s always better to trade with smaller lot rather to trade with free credits that don’t have any financial value. You’ll still be involved in the market whirlpool without much risk.