One standard lot equals 100,000 units of the base currency. EUR/USD at one lot represents 100,000 euros of exposure. The unit scales down in fixed increments: mini lot at 10,000, micro lot at 1,000, nano lot at 100. The smaller increments exist so small accounts can take real positions without overshooting their own equityEquityThe live value of your broker account, including the floating profit or loss of open positions.Click the word to learn more.
PipPipThe smallest standard price increment on a currency pair, usually the fourth decimal.Click the word to learn more value follows from lot size. On EUR/USD, one standard lot is roughly 10 USD per pip. One mini, 1 USD. One micro, 10 cents. Once the quote currency is not USD, the broker does the conversion behind the scenes at the live rate. The actual number lands a fraction off the round figure, but the shape is the same.
Algorithmic strategies do not hold lot size constant. The right size depends on three inputs: how much equity is in the account today, how wide the stop lossStop LossAn exit order that closes a losing position the moment a chosen price level is hit.Click the word to learn more is on this particular positionPositionA single entry held on the broker account, with a direction, a size, and a current floating result.Click the word to learn more, and how much of that equity the strategy is willing to risk per position. Plug those three in, the lot size falls out.
This is the part that does not happen on a manual account left to itself. Equity drifts, volatility changes, stop distance varies. A fixed lot quietly becomes the wrong lot. Computed lots stay calibrated.