Micro lots are the first and smallest of different types of lot sizes. If you trade euros against dollars -- EUR: If your base currency is US dollars then the value of 1 pip will be equal to 10 cents.
It is an important question for the traders that which lot size should they select. The answer of this question depends on the trading style of the Forex traders. The smaller lot size is advised by experts because the smaller is always the better. It will be easy to open and close trades for the traders if the lot size will be smaller. On the other hand, closing a trade with the bigger lot size will be more risky as compared to closing the trade with the smaller lot size. To take better decision on the selection of the correct lot size, it is important to know and understand the different types of the Forex trading lot sizes available in the foreign exchange market.
Micro lots are the first and smallest of different types of lot sizes. A Micro Forex lot has only units of the base currency. If your base currency is US dollars then the value of 1 pip will be equal to 10 cents. Trading in micro lot size is most suitable for the beginner currency traders. The probability of loss is least for the traders placing the trade orders in the micro lot sizes. Trading in the micro lot size is also good for those traders who want to invest less in the fx market.
To know more about Forex mini lot vs micro lot difference keep reading. Micro lots have not existed since the beginning of the foreign exchange market. Before the micro lots were introduced to favor the small level traders, the mini lots have existed. E-mini contracts and mini Forex accounts operate in different markets. Which is best depends on the trader's preference and size of her trading account.
E-mini contracts are smaller sized futures contracts from the commodity and futures exchanges. E-mini contracts only trade over futures electronic trading systems as opposed to both floor and electronic trading for standard contracts. The e-mini futures contracts also represent a smaller amount of the underlying instrument or commodity. For example, an e-mini Silver contract is for the delivery of 1, ounces of silver.
The standard silver futures contract is for 5, ounces. You trade e-mini futures through a registered commodity futures broker.
Foreign currency exchange -- Forex -- is traded through independent brokers. The standard Forex lot is , of the base currency in a traded currency pair. If you trade euros against dollars -- EUR: In a mini Forex account, the lot size is 10, currency units. With a mini account, the required margin deposit and the amount of money a trader needs to trade is one-tenth the money of a standard Forex trading account.
To trade either e-mini futures or Forex mini lots requires a trader to put up a margin deposit for each contract or lot traded. E-mini futures margin rates are set by the commodity exchanges. The Forex trading rules allow If the base currency is U. In both e-mini and Forex mini trading it is possible to lose more than the initial margin amount, so a trader should have on deposit enough money to cover the margin for trades and some cushion. The e-mini futures products primarily trade against products that are not currency exchange trading.
For Forex trading, the commodity exchanges offer e-micro contracts, which are similar in size to a mini Forex lot size. E-micro Forex futures are exchange-traded products, while mini Forex trading is accomplished over the counter through a broker.