• Forex Market – An In-depth Understanding

    Forex or foreign exchange is nothing but the exchange of currencies. This is the definition of Forex. To explain this...

  • What are lots in Forex?

    Forex market functions based on lots. There are many brokers in this market who offer to help the traders with different...

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Forex market is a highly volatile market. A trader gets to brace his deposits by taking advantage of the changes in currency values. At the same time, this market might not favor him all the time.

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This new feature of lots into different categories has made this market even more viable since it has opened its doors to all people.

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Forex Market – An In-depth Understanding

Forex or foreign exchange is nothing but the exchange of currencies. This is the definition of Forex. To explain this term in simple words, it is nothing but the exchange of different currencies between different countries for conducting regular trade and business. For example, if a person wants to travel to a different country, he will not be able to use his country`s currency in the other country. So it becomes important for him to go for an exchange. To make it simpler, if you want to buy butter, you or the store you are buying from should have done this Forex to make the product available in that particular country. So this way, we get to understand that almost 70% of the products that we use in our daily living are all made available to us through this very effective Foreign exchange.

Foreign Exchange Market

Foreign exchange market is the spot where these different types of currencies are traded. This is a highly liquid and the biggest and largest market; it is so very big and voluminous that even the stock markets look and functions smaller than this. One feature that makes it stand unique from the others is that there is no center spot for this and everything happens online via networks. So unlike the other markets wherein there is the main point for transactions, here all the exchanges happen everywhere equally and electronically over –the-counter. This market is everywhere around the world making Forex possible around the globe. This is open 24 hours for five and a half days a week and hence is one of the most active markets. The changes in the currency values get updated automatically and hence trades happen at the aptest values every time. The important thing in this international market is the basic understanding of the market and the various jargons used here.

What are lots in Forex?

Forex market functions based on lots. There are many brokers in this market who offer to help the traders with different types of lots and also extend their assistance in the trading procedures and process. There are basically three types of lots in this market that are offered by these brokers.

Now before getting in deep to understand these different types, let`s first understand the basics. Initially, this market did not have different segments and it was all about just a standard lot size which equaled 100000 units. But with the development of technology, it became necessary to break this huge unit into small ones for easy and flexible trading and that is how we have the different types and lot sizes here.

  • Micro lot – this is the most simple and smallest lot in the market. Here 1 lot = 1000 units. This might look very small but is a great place for traders with small capital to start their trade with. This is one best place for people who want to trade but with a small initial investment. Like the small start-up deposit, the profits are also very small or sometimes nothing even but at the same time, the losses are also very minimal or in fact negligible. So it is one very safe market to conduct trade and have trades.
  • Mini lot – this is the next bigger category in the Forex market. Here 1 lot equals 10000 units. So this might not be a suitable place for small traders. But for serious traders who have a decent amount in hand in the name of capital can try making a fortune here. This requires the traders to have at least $1000 in their account and this is one eligibility criteria for trading with this lot size. So traders who are serious about trading but have a smaller capital can confidently trade here with a good knowledge of the market.
  • Standard lot – here every lot is equal to 100000 units. So looking at the bigger size, we understand that the risks are equal to the gains. So since the losses expected here are higher, a trader who decides to trade here needs to have at least $ 10000 in his account for meeting the losses sumptuously.

These are the different types of lots available in the Forex market. This categorization has made this market more flexible and accessible to all types and classes of people.