ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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1, 000
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10.000
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100, 000
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1
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Detailed explanation-1: -A standard lot represents 100, 000 units of any currency, whereas a mini-lot represents 10, 000 and a micro-lot represents 1, 000 units of any currency. A one-pip movement for a standard lot corresponds with a $10 change.
Detailed explanation-2: -A standard lot in forex is equal to 100, 000 currency units. It’s the standard unit size for traders, whether they’re independent or institutional. Example: If the EURUSD exchange rate was $1.3000, one standard lot of the base currency (EUR) would be 130, 000 units.
Detailed explanation-3: -For direct currency quotes: The contract trade size is 100, 000; trade volume is 0.1 lot or 1000 base currency units. The rate of the USDCHF – 0.91070. Lot value in USD = 100, 000 * 0.01 = 1, 000. This means that with a trade volume of 0.01 lots, 9, 107 CHF will be bought and 1, 000 USD reserved by the broker.
Detailed explanation-4: -100, 000 Units = 1.00 Lot. 10, 000 Units = 0.10 Lot. 1, 000 Units = 0.01 Lot. Below 1, 000 Units = 0.001 Lot.