What is a Micro Lot in Forex
What Exactly is a Micro Lot?
A micro lot represents 1,000 units of the base currency in a forex trade. In a USD-denominated account, this equals 1,000 USD in notional value. The pip value for a micro lot is 0.10 USD for pairs where USD is the quote currency (e.g., EUR/USD, GBP/USD). This small size allows Serbia traders to enter positions with as little as 10-20 USD margin when using typical leverage of 1:50 to 1:200.
How Micro Lots Work for Serbia Traders
When you open a trade with a micro lot, you control 1,000 units of currency. For example, buying EUR/USD at 1.1000 with one micro lot means you are buying 1,000 EUR and selling 1,100 USD. If the price moves to 1.1010 (10 pips), you gain 1.00 USD (10 pips x 0.10 USD per pip). This small profit/loss per pip makes micro lots perfect for testing strategies without significant financial exposure.
Why Micro Lots Matter for Serbia Traders
In Serbia, retail forex traders often start with limited capital due to local income levels and economic conditions. Micro lots enable you to trade with as little as 50-100 USD total account balance. They also allow precise risk management—you can risk only 1-2% of your account per trade. For example, with a 500 USD account, risking 2% means you can set a stop loss of 10 pips on a micro lot (10 pips x 0.10 USD = 1.00 USD risk). This granularity is not possible with standard lots (100,000 units) or mini lots (10,000 units).