Lot Size
There are three types of lot size, i.e. standard lot, mini lot and micro lot.
- Standard lot = 100,000 units of base currency
- Mini lot = 10,000 units of base currency
- Micro lot = 1,000 units of base currency
Margin
Margin is the equity value of your trading account. If you deposited $500 initially, this $500 is your initial margin. It depends on whether you win or lose when you trade, your margin will increase or decrease accordingly.
Leverage
You are not required to pay for the full amount of the lot when you open a trade position. Most of the forex brokers offer leverage of up to 200:1. With a leverage of 200:1, you are only required to pay for 1/200 of the lot amount. For Instance, if you would like to trade with one mini lot, you are only required to pay $10,000/200=$50. Your free margin will be $500-$50=$450 when you open a mini lot position.
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