Forex investing is a currency exchange that the majority of people more or less involved in trading have probably heard of. It is considered to be one of the biggest and most internationally recognized platforms for trading – its daily turnover exceeds $5 trillion. This is more than the turnover of all national stock markets combined. Forex market participants are the largest banks of different countries, investment and pension funds, large companies, and private investors with huge personal capital.
Fortunately, almost anyone can buy and sell currencies (for example by speculating on changes in quotations) online, at any time during weekdays. All you need to do is get a social trading platform, which is also sometimes referred to as a terminal. Roughly speaking, you will need to open this platform and click on “Sell” whenever you think you are ready to sell (surpassingly when you think this will increase your profits). On the other hand, you could also press “Buy” whenever you think it will be beneficial.
This is the basic principle of forex trading. Of course, there are a lot of nuances and ways to increase the likelihood of your forecast being correct, which might get better with practice or learning more about the industry. You can learn more about trading on the NAGA blog – we post articles that help you get better insights into trading, as well as major news that might have an impact on the overall trading environment.
What are lots in forex
Whatever trading operation you decide to go for on Forex – all of them are measured in what is known as lots. What are lots in Forex? Lots are the basic concept in Forex trading. But it is important not only to know what a lot is in Forex but also to be able to accurately calculate this indicator for your Forex trading strategy. But how much is a lot? The rule of thumb is that 1 lot on Forex is equal to 100,000 units of the main currency (base currency). For example, in a USD/GBP currency pair, USD acts as a base currency. This means that 1 lot of the current contract for this pair is equal to 100 USD. The size of the trade can be measured as an integer or as a fractional number of lots.
At some point, it becomes an intuitive assumption that only significant and large traders - financial institutions like funds and banks - can speculate on lots. For individuals, to enter the Forex market, you can use various options for a lot of a standard size, which is provided by popular dealing centers and brokers:
- The first type of lot is a micro lot containing 1000 units of the main currency instrument (base). The volume of such a lot is 0.01 of the standard lot size.
- The second lot is a mini lot containing 10,000 units of the main currency instrument (base). The volume of such a lot is 0.1 of the whole (standard) lot;
- The third type of lot is a standard Forex lot (in other words, a whole lot), containing 100,000 units of the main currency instrument (base). The volume of such a lot is 1.
All the work of dealing centers and Forex brokers is that they "collect" already crushed lots from traders. After that, brokers combine these lots and bring them to the market.
This whole process is done completely automatically and hidden from users. However, it is thanks to such activities that you get the opportunity to trade in Forex. After all, few people have a couple of extra $100,000 to make a direct entry into the market.
The volumes of trading operations carried out on the market are completely different for each player and depend on your own choice of strategy and level of experience. It thus is sometimes scary for beginners to calculate the size of a lot that they need. Thankfully, there exist special tools that make things easier - for example, lots of calculators. All you need to do is to select the desired currency pair, account currency, leverage from the drop-down lists, then enter the lot size and the calculator instantly calculates the price of 1 point, collateral, and other data. Tools like this make trading much more enjoyable, interesting, and simple. Happy trading!