DEFINITION of 'Micro-Lot'

A micro-lot is the equivalent to a contract for 1,000 units of the base currency in a forex trade. The base currency is the first currency in a pair or the currency that the investors buys or sells. Trading in micro-lots enables traders to trade in small increments.

BREAKING DOWN 'Micro-Lot'

When an investor places an order for a micro lot, this means they have placed an order for 1,000 units of the currency being bought or sold. For example, in the EUR/USD currency pair, the euro is the base currency and the trader either buys or sells 1000 euro. 

A micro-lot is the smallest unit of currency trading and is used by novice traders looking to start trading but who want to reduce the potential downside. Investors use micro-lot sizes when they prefer not to trade mini or standard lots. Ten mini lots are equal to 100 micro lots, which is equal to one standard lot.

Most retail brokerage accounts allow traders to trade micro-lots with minimal initial deposits. 

RELATED TERMS
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  4. Currency Pair

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