What is a Contract Lot?

Contract Lot Definition. A Contract Lot is a trading unit of currency. A standard lot in the forex market is $100,000, a mini lot is $10,000, and a micro lot is $1,000. Forex trading ten years ago was strictly the province of major global banks and financial institutions since prevailing lot sizes were $1 million and average transaction sizes were for $5 million. However, creative brokers developed aggregation networks that permitted the offering of smaller lot sizes, and together with leverage and Internet access, retail forex trading was born. Increased sophistication in trading and data management software contributed to the popularity and dramatic growth of retail forex trading on a global basis over the last five years. Convenience and flexibility are now the hallmarks of the industry.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.