What is a Lot in Trading 2021

What is a Lot Size?

If you are asking the question “What is a Lot?” then you have quite a bit to learn.

The reason we say that, is because the term ‘lot’ can be used in a whole variety of different ways, depending on the trading asset.

Lot sizes, or values, are usually defined by market regulators and exchanges, but sometimes by the brokerage you are using.  In the latter example, you will often see the term ‘contract size’ used rather than ‘lot’ to determine the minimum investment value available to trade. Once you understand what the terms mean, everything will become much clearer.

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A Few Things to Bear in Mind

The terminology we have described in this guide is in accordance with the recognised descriptions of a standard lot within a variety of investment markets.  However, it does not reflect the fact that individual brokers sometimes have their own definitions of a lot.

That statement is not intended to imply that any particular broker is trying to mislead you; it is just to make you aware of that fact and to recommend that you always confirm in advance exactly what you are investing in.

Where will I find the right information?

If you are already signed up with a broker, it is likely to form a specific part of your contract with the broker.  Alternatively, you might find the answer in the FAQ or Education section of your broker’s website.  If you are still unclear, don’t be shy about contacting the customer support team for clarification, which is exactly what they are there for.

If you are still at the stage of deciding whether a broker is right for you, it is worth taking a look at the relevant section of a broker’s Terms and Conditions documentation.  You should be available to view this document without registering for an account.  If you are unable to find a specific section dedicated to that subject, our advice is to contact the broker’s customer support team for clarification.

Lot Definitions

As we have already mentioned briefly, there is more than one answer to the question ‘what is a lot?’  In fact, there are many answers depending on the type of financial product you are considering.

Below you will find a list of the most common trading or investment assets and their individual variations in terms of the lot size applicable.

What is a Lot in Stock Trading?

The term stock trading refers to the purchase or sale of shares offered publicly via a stock exchange.  The shares available on the stock markets are offered by major, listed companies, often household names.  Stock trading is a complex subject, if you are new to this type of trading, you will find our how to buy stocks for beginners guide helpful.  For the purpose of buying or selling, the stock market defines a standard lot as 100 shares; you may also see this described as a ‘round lot’.

However, modern brokers who also cater for retail investors may offer ‘fractional share’ opportunities, to accommodate the purchase of a single share, or even a small part of a share.  Naturally, the trading cost is higher than if you purchase a standard lot.

What is a Lot in Penny Stocks?

Unlike stock trading, which is dominated by blue-chip companies, penny stocks are shares made publicly available by lesser-known or newly-established companies.  These companies are not listed on the major stock exchanges and their shares are offered via minor exchanges.  Also, there is no standard lot size for this asset.

Penny stocks have two inherent characteristics; low liquidity and high volatility.  Because of that, even small market movements can result in dramatic price fluctuations, which is the reason they are not offered in lots.  When you place an order with your broker, he will buy small, random quantities of your chosen stock, over a period of time, to avoid adverse price changes.

What is a Lot in Commodities?

Within the commodities market, it is more appropriate to ask ‘what is a lot size?’  In this market, lots are always described as ‘contract sizes’ in reflection of the way the underlying commodities are described.  For example, one lot of grain would be represented by a specific weight in either metric tonnes or bushels.

This is not ‘carved in stone’ so to speak, the commodities market also offers non-standard contract lots to increase liquidity within the market.

What is a Lot in Options?

An options contract provides investors with the opportunity, but not the obligation, to buy or sell any given asset at a fixed price.  The transaction can be accepted or declined at any point within the duration of the contract.

An option can be applied to any type of asset, so the lot size is specific to that asset and the individual options contract.

What is a Lot in Bonds?

Bonds are effectively company debts and are usually large amounts, so the bond market does tend to be dominated by corporate investors rather than individuals.  Lots within the bonds market are variable and assigned at face value.

The debt is often rounded up to either $100,000 or $1 million.  However, it is still possible to find smaller lots, ranging from $1000 upwards, or to invest in a part lot with some brokers.

What is a Lot in Trading?

In this instance, trading is a term that is usually taken to describe activity related specifically to an underlying asset, rather than buying or selling the asset itself.  Included in this definition are CFDs and binary options.

You will find in this trading environment that the term ‘lot’ has little meaning. The majority of derivatives traders rely on spreads, use leverage in CFD trading and seek out multiple fast trades, some lasting less than a minute.  In that scenario, trades are generally placed by monetary value rather than in lot form.

What is a Lot in Forex?

The Forex market is something different again; some brokers offer lots, others rely on monetary value.  Theoretically, a lot is 100,000 units of any given currency, which can represent a huge amount of money.

Forex brokers offset that by offering traders much smaller portions of a lot, which are labelled as follows:

  • Mini lot    10,000 units
  • Micro lot    1,000 units
  • Nano lot       100 units

Alternatively, a Forex broker may take your trade based on a specific amount e.g. $150 rather than relating it to lots at all.  As a Forex trader, your trades will almost invariably be related to pips.  What is a pip? It’s a big subject and we have covered that subject in depth in a separate guide.

Some Lot Terminology Defined

As you have already seen, a lot is represented differently by individual asset markets, specific trading environments and even brokers.  In addition to understanding that part, you are also likely to encounter some other lot-related terminology, which we will now explain.

Round Lots

A ‘standard’ lot, appropriate to its asset class, is often described as a ‘round lot’ or a ‘board lot’ on the Asian stock exchanges.  Orders which encompass multiples of a specified lot size are also classed as round lots.  Round lot orders are easier to fulfil, because they can be executed immediately and generally incur less brokerage fees.

Here are some examples of round lot quantities.  There are many more variations, including some very strange-sounding items, particularly within the Commodities market.  Well worth a peek if only for the entertainment value:

  • 100,000 units of currency
  • 100 Barrels of Crude Oil
  • 1kg Gold and Silver

Odd Lots

By contrast, an ‘odd’ lot is an order for an amount that is less than the standard unit applicable to the asset being traded.  Although investing in an odd lot will cost less, you will pay a higher level of commission to your broker.  Also, part-lot orders take longer to execute because they are held by the exchange until a round lot can be fulfilled.

Mixed Lots

As the name suggests, a ‘mixed lot’ consists of an order containing a mix of round and odd lots.  It is always a greater amount than the standard lot unit applicable to the asset being traded.  As with odd lots, you may experience delays in the execution of a mixed lot order and in some instances, only the round lot part of the order is processed and the remainder rejected.

To Buy a Lot, or Not – The pros and cons explained

Whether you are a professional investor with a substantial trading portfolio, or just entering the world of trading, there are a few further facts about lot sizes that you should consider when you place orders:


  • An order for a full lot is more likely to be executed immediately
  • Orders for multiple round lots are often discounted
  • Commission costs are less for round lots than for odd or mixed lots


  • There can be delays in executing mixed or odd lots due to exchange routing
  • Certain exchanges may reject odd and mixed lot orders completely
  • In some mixed lot scenarios, only the round lot element will be executed, with the remainder being rejected
  • You will pay more commission for mixed and odd lots

How Online Trading Affects Lot Sizes

With a trend towards more retail trading taking place online, much has changed in the way that goods and services are offered, including financial assets.  Even the most traditional stockbrokers are gradually coming around to the idea that their clients want digital access to their portfolios.

Other markets have moved on much faster and there are now thousands of brokers who can offer retail clients low-cost, self-service trading opportunities in a variety of asset classes.  In fact, this modernisation of the trading markets has attracted an entirely different demographic and is responsible for the development of some of the best trading platforms we have seen.

In turn, the increasing trend towards younger traders, many with a limited investment pot, has devolved the concept of lot sizes to accommodate their trading needs.

Conclusion – What is a Lot?  We hope you know the answer now!

Although the answer to almost any question can be found through Google, the chances are that you tried that option already and were even more confused on the subject than when you started.  In our experience, there is often too much information, or sometimes the wrong information entirely.

We always think that it is ideal to have a good working knowledge of a subject, without feeling the need to be an expert.  Therefore, all of our trading guides are designed to provide you with accurate information in a concise and understandable format.

All of the different terminology about lots and their variations can certainly be confusing.  However, now that you have had the chance to read (and digest) this guide, we hope you have gained enough understanding to feel more confident within your chosen type of trading or investment.

In modern trading terms, there is certainly far less emphasis on lot size and much more interest in derivative products, which rely on different concepts altogether.  This is particularly evident where online trading is concerned and we will be covering those subjects in detail within our series of guides.

What is a Lot? FAQ

❓ Why when I search ‘what is a lot’, do I get information about pips?

The results you have seen are most likely posted by trading brokers who offer Forex as a tradable asset.  Forex brokers usually offer trades below the standard currency lot of 100,000 units, but your risk exposure is related specifically to pip values and leverage, which are subjects we have covered in a separate guide.

🏸 I can’t find a simple definition for ‘what is a lot in trading’, can you tell me why?

There is a good reason you cannot find a direct answer.  Most online searches concerning trading terms will return results for the brokers who provide those services, who hope that you will visit their website. The answer to the question will then depend on which assets that particular broker has on offer. Take a look at our broker reviews to see which one is best for your trading needs.

💡 What is a lot size?

The phrase ‘How long is a piece of string’ comes to mind here.  As you will have seen from the information in this guide, the answer is almost on a similar level.  If you are intent on a particular type of trading, or have a specific asset in mind, you may need to refine your search. Be sure to consult our trading guides here at Betting.co.uk to brush up on your trading knowledge.

📉 Where can I trade mini or micro lots?

Trading in smaller lot portions like these is usually associated with the Forex trading market and some brokers also offer an even smaller version known as nano lots. Trading with smaller lot sizes means that your level of investment is lower, meaning less risk and limiting potential losses.  Many brokers offer this type of account and it is a subject we cover in our broker reviews.

💲 Is a $200 investment enough to buy a lot?

Some online brokers offer trading opportunities in such a way that the amount you invest represents a ‘lot’.  However, this is in the broker’s context rather than in the true sense of the term. For a beginners guide to trading, be sure to visit Betting.co.uk Finance.

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