Remember the Crude Oil example? We measured the trading volume in barrels, right? Well, there’s an easier way to describe it and it’s called Lot.
Lot is by default a unit of measure when it comes to trading. It has multiples and fractions such as Mini lot (a tenth of a lot) and micro-lots (a hundredth of a lot).
Back to the crude oil example;
1 lot = 100 barrels x 45 USD =4500 USD
0.10 (mini lot) = 10 barrels x 45 USD = 450 USD
0.01 (micro lot) = 1 barrelx 45 USD = 45 USD
Each of these market values the need to account for the leverage to understand the required margin to open a position as explained above.
Now some exercises for you:
1. Calculate the value for 0.2 lot and 0.04 lot for EUR/USD in case 1 Lot = 100.000 EUR. Than calculate the required margin on a 1:400 leverage.
2. Amazon shares cost 1800 per share. If a lot = 100 shares, 0.07 = ? Than calculate the required margin on a 1:20 leverage.
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