Lots: standard, mini and micro
On USD/ZAR, one standard lot is 100,000 units, a mini lot is 10,000 units, and a micro lot is 1,000 units. Nothing else changes the maths. If the rand moves, the same pip is worth ten times more on a mini lot than on a micro lot, and ten times more again on a standard lot. That is the whole lesson: size first, then price.
The unit count behind the lot size and why it matters
A standard lot is 100,000 units of the instrument. A mini lot is 10,000 units, and a micro lot is 1,000 units. The platform shows lot sizes as 1,00, 0,10 and 0,01. Those numbers are just the unit count divided by 100,000. So 0,10 means 10,000 units, and 0,01 means 1,000 units. There is no separate product called a mini lot. It is only a smaller number of units.
The unit count tells you how much each pip of movement is worth in rand. On USD/ZAR, one pip is 0,0001 in the price. If you hold 100,000 units, a one pip move changes the value by 10 rand. For 10,000 units, one pip is about 1 rand. For 1,000 units, one pip is about 0,10 rand. These figures assume the rate is near 18,4100. They change slightly as the rate changes.
The platform may show a different profit for the same price move if the lot size is different. That is not a glitch. It is the unit count doing its job. A 20 pip move on 1,000 units is about 2 rand. The same 20 pip move on 100,000 units is about 200 rand. The price move is identical. The unit count is not. Always check the lot size before you judge a profit figure.
How the rand value of a pip is calculated from the lot size
To find the value of one pip, multiply the units by the pip size. On USD/ZAR, the pip size is 0,0001. For 10,000 units, that is 10,000 times 0,0001, which equals 1. So one pip is worth about 1 rand. For 1,000 units, one pip is about 0,10 rand. For 100,000 units, one pip is about 10 rand. These are approximate because the rate at closing may differ.
Brokers may round the pip value to two decimal places. Some quote it in the account currency, which is rand here. Others may show it in the base currency and convert. That is why two brokers can show slightly different profit for the same trade. The difference is usually small. It comes from rounding and from the exact rate used at closing. Spread, commission and swap are charged on top and vary between brokers.
You can use this calculation to plan a trade. If you want to risk 5 rand on a 25 pip stop, divide 5 by 25. That gives 0,20 rand per pip. Then find the lot size where one pip is about 0,20 rand. A 0,01 lot gives about 0,10 rand per pip, so it risks about 2,50 rand on a 25 pip stop. A 0,02 lot would give about 0,20 rand per pip and risk about 5 rand. Not all platforms offer 0,02 lots. Check what your platform allows.
Choosing a lot size from the rand risk you accept
Start with the rand amount you are willing to lose on the trade. That is your risk. Then decide where your stop loss will sit, in pips. Divide the risk by the number of pips. The result is the rand value per pip you need. Then choose the lot size that gives that pip value. If the exact lot size is not available, choose the next smaller one. That keeps the risk below your limit.
For example, you have R500 and you will risk R10 on a trade. Your stop is 20 pips away. R10 divided by 20 pips is R0,50 per pip. A 0,05 lot would give about R0,50 per pip, but if your platform only offers 0,01, 0,10 and 1,00 lots, then 0,01 lot is the nearest smaller size. It risks about R2,00 on a 20 pip stop. That is less than your R10 limit, which is acceptable. You are not forced to use the full risk.
A common error is to pick the lot size by the profit it might make. That ignores what a normal price swing would cost. On a R500 account, a 1,00 lot makes a 20 pip move worth about R200. That is 40 per cent of the account. A 0,10 lot makes the same move worth about R20. A 0,01 lot makes it worth about R2. The smaller lot does not reduce the quality of the trade. It only reduces the rand effect of being wrong. Decide the loss you can accept first, then work back to the lot size.
1,00, 0,10 and 0,01 lots on a R500 deposit
| Step | Amount | Note |
|---|---|---|
| Deposit | R500 | the money in the account before any trade |
| USD/ZAR price used | 18.4100 | the example rate for this lesson |
| 1,00 lot (standard) | 100,000 units | one standard lot |
| 0,10 lot (mini) | 10,000 units | one tenth of a standard lot |
| 0,01 lot (micro) | 1,000 units | one hundredth of a standard lot |
| Value of a 1 pip move on 0,01 lot | about R0,10 | 1,000 units x 0,0001 = 0,10 units of USD, converted at 18.4100 |
| Value of a 1 pip move on 0,10 lot | about R1,00 | 10,000 units x 0,0001 = 1,00 unit of USD, converted at 18.4100 |
| Value of a 1 pip move on 1,00 lot | about R10,00 | 100,000 units x 0,0001 = 10,00 units of USD, converted at 18.4100 |
| A 20 pip move against you on 0,01 lot | about R2,00 | 20 x R0,10 |
| A 20 pip move against you on 0,10 lot | about R20,00 | 20 x R1,00 |
| A 20 pip move against you on 1,00 lot | about R200,00 | 20 x R10,00 |
The exact pip value depends on the rate at the moment the trade is closed, and brokers vary in how they round it. Spread, commission and any swap are quoted or charged on top, and these differ between brokers.
Doing it once, step by step
These steps show you how to set a lot size from a rand risk amount, using the USD/ZAR rate near 18,4100. Do them in order before you place a live trade.
- 01
Write down your rand risk
Choose an amount you are willing to lose on this one trade. It should be a small part of your account. For a R500 account, R5 or R10 is a common starting point. Write it down before you look at any lot size.
- 02
Choose your stop distance in pips
Decide where the price would prove your idea wrong. Measure that distance in pips. On USD/ZAR, one pip is 0,0001 in the price. A stop 25 pips away is 0,0025 in price terms. Write that number down.
- 03
Divide risk by pips
Divide your rand risk by the number of pips. If you risk R5 and your stop is 25 pips, the result is R0,20 per pip. That is the pip value you need from your lot size. Keep the answer to two decimal places.
- 04
Match the pip value to a lot size
Use the guide: 0,01 lot is about R0,10 per pip, 0,10 lot is about R1,00 per pip, and 1,00 lot is about R10,00 per pip. If your needed pip value is R0,20, the closest smaller lot is 0,01. If your platform offers 0,02 lots, that would be closer. Check your platform's available sizes.
- 05
Check the total risk before you trade
Multiply the pip value of your chosen lot by the stop distance in pips. For 0,01 lot and 25 pips, that is 0,10 times 25, which equals R2,50. Compare it to your original risk limit. If it is higher, choose a smaller lot or a tighter stop. If it is lower, you are within your limit.
- 06
Confirm the rate and costs
The exact pip value depends on the rate when the trade closes. Brokers also charge spread, commission and swap on top, and these vary between brokers. Check the current rate and your broker's costs before you place the trade. The FSCA regulates brokers in South Africa, and payment methods include EFT, instant EFT and bank cards.
The mistake most people make here
The common mistake is to pick a lot size by how much profit it might make, not by how much a normal move would cost. On a R500 deposit, a 1,00 lot turns an ordinary 20 pip swing into about R200, which is 40% of the account. People also assume a smaller lot is a different product or a demo setting; it is the same trade, just smaller. Decide the rand amount you are willing to lose on the trade first, then work backwards to the lot size that keeps a realistic stop within it.Check yourself
On USD/ZAR, a 0,10 lot moves 30 pips in your favour. What is the gain before costs?
One pip on 0,10 lot is about R1,00, so 30 pips is about R30,00 before spread, commission and swap.
You have R500 and want a 25 pip stop to risk about R5,00. Which lot size fits?
R5,00 divided by 25 pips is R0,20 per pip. A 0,01 lot is about R0,10 per pip and a 0,10 lot is about R1,00 per pip, so 0,01 lot is the closest fit and risks about R2,50.
Questions that come up next
If I choose a smaller lot, do I pay less spread or commission?
Spread and commission are usually charged in proportion to the size of the trade. A 0,10 lot will normally cost about a tenth of the spread and commission of a 1,00 lot on the same instrument. The exact amounts vary between brokers, and some brokers set a minimum charge per trade. So a smaller lot does not always mean a proportionally smaller cost, but it is never more expensive than a larger lot on the same trade.
Can I change the lot size after I have opened the trade?
You can add to a trade or close part of it, but you cannot change the original size of the trade itself. If you want a different size, you close the trade and open a new one. That new trade will have its own entry price and its own costs. Some platforms let you set a default lot size for new trades, which can help you avoid mistakes.
Why does my platform show a profit in rand when the trade is still open, and then a different amount when I close it?
The profit shown while the trade is open is an estimate based on the current price. When you close, the final profit is calculated at the exact closing price. That price may be slightly different from the last shown price. The difference is usually small, but it can be larger in fast markets. Spread, commission and swap are also applied at closing, which can change the final amount.
Is a micro lot always 1,000 units, or does it depend on the broker?
A micro lot is normally 1,000 units, but some brokers may define it differently. Always check the contract specifications on your platform. The same applies to mini and standard lots. The unit count is what matters, not the name. If the platform shows 0,01, that usually means 1,000 units, but confirm it.
How do I work out the pip value for a lot size that is not exactly 0,01, 0,10 or 1,00?
Multiply the number of units by the pip size. On USD/ZAR, the pip size is 0,0001. For example, 5,000 units times 0,0001 equals 0,50 rand per pip. You can use that to estimate the risk for any lot size. Remember that the exact value depends on the rate at closing and on how your broker rounds.
What happens if I open a trade with a lot size that is too big for my account?
A large lot size means each pip moves your profit or loss by a larger rand amount. If the market moves against you, the loss can grow quickly and may exceed the money in your account. The broker may close the trade automatically to prevent a negative balance. To avoid this, choose a lot size where a realistic stop loss would only risk a small part of your account.
The words used on this page
- Lot
- A lot is the size of one trade. It tells you how many units of the instrument the trade controls. The platform shows it as a number like 0,10 or 1,00.
- Pip
- A pip is a small step in the price of an instrument. On USD/ZAR, one pip is 0,0001. The value of a pip in rand depends on the lot size.
- Spread
- The spread is the difference between the buying price and the selling price. It is a cost you pay when you open a trade. It varies between brokers and can change with market conditions.
- Stop loss
- A stop loss is an order that closes your trade at a chosen price to limit your loss. You set it in advance. It helps you control how much you are willing to lose.
- Swap
- A swap is a small charge or credit for holding a trade overnight. It depends on the instrument and the broker. It is added to or subtracted from your profit.
What to take away
- The lot size is the number of units in one trade: 1,00 is 100,000 units, 0,10 is 10,000, and 0,01 is 1,000.
- The lot size decides what one pip is worth in rand, so it decides the risk and the profit of the trade.
- Choose the rand amount you are willing to lose first, then pick the lot size that keeps a realistic stop within that amount.
- Spread, commission and swap are charged on top and vary between brokers, so the final profit or loss is never exactly the pip value alone.