If this is the first time that you have come across the terms “micro-lot” or “nano-lot,” then you are the target audience for this piece. Even though you are aware of the term’s micro and nano lots, it is possible that you may not fully get all the benefits of employing these sizes of lots in your forex trading. This is because there are so many benefits associated with using these sizes of lots. Visit multibankfx.com
The size of a nano lot is one-tenth that of a micro lot and one-hundredth that of a mini lot, and it is comparable to one hundred units of a base currency. One point (or “pip”) of a currency pair that is denominated in U.S. dollars is equated to just $0.01 in value when trading a nano lot.
Nano-lot trading’s many advantages
- You Don’t Have to Take Huge Initial Steps
Whether you are certain that Forex trading is for you, or you are just trying out trading for the first time, you must keep your risk modest in the beginning. You will begin with small steps. In the Forex market, there is no distinction. Nano lots are so small that even inexperienced traders with a little starting capital can jump in with both feet. Even if you only have yourself to answer to, starting with a modest account is a wise approach to keep your losses small while you are learning. You shouldn’t risk a large sum of money until you’ve already shown success with a practice account.
- Alleviating Stress
If you’re risking more than 1% per trade, you should reduce it. With nano lots, you may tailor your lot size to the particulars of each trade. No matter how much money you have in your trading account, you should always use a stop loss amount that is reasonable for the sort of trade you are executing.
- Find out how well a strategy works and if it can meet your needs
Without making a large financial commitment, you can’t be sure. You might find a method that does well in historical simulations and simulated trading. However, when even a small sum of money is at stake, a person’s voice and speech falter. Small investments are all that’s needed to test whether a forex trading strategy will work in practice. You could be taken aback by what you discover.
- Preferred Approach
You will encounter hiccups in your trading career no matter how much experience you gain or how huge your lot sizes get. That’s how things work in the corporate world. After such a setback, you might feel discouraged and less willing to take risks in your future bets. If you feel like you’ve lost your motivation, try working with smaller quantities (or “micro-lots”) to see if that helps you get back into the swing of things.
- There is always the possibility of broadening one’s horizons
Don’t be put off trading greater lots by the tiny size. To purchase 100,000 nano lots, enter “100,000. Nano-sized quantities are indispensable because of the flexibility they provide.
There are many benefits to trading in micro-lots on the foreign exchange market. Micro lot trading is a steppingstone between demo trading and full-scale lot trading in the foreign exchange market. In this post, we’ll go through the many benefits of trading micro lots in the foreign currency market.
With the numerous advantages of trading micro and nano lots, your forex trading will be able to progress in the proper direction toward trading on a larger scale.
Advantages of Trading with Micro Lots
- Demo Trading Before Investing in Micro Lots
Start by trading on a demo account until you are satisfied that you have mastered your chosen forex trading technique and can apply it profitably and consistently. Once you’ve found a profitable trading approach and demonstrated that you can employ that method profitably in a simulated trading environment, you’re ready to begin trading micro lots. If you can’t show that your trading system works on a demo account, you shouldn’t move on to micro lot trading unless you’ve found a strategy that works well for you and has a proven track record of profitable demo trades.
- We are moving forward with micro lot trading
Investors can participate in the foreign exchange market with real funds while yet limiting their risk thanks to micro lot trading. Scaling up from micro lots to full-size lots in forex trading is as simple as entering transactions with 2–4 micro lots and using a stop order.
This step is best taken after extensive practice trading with fake money. This is smart financial management since you are improving your knowledge while engaging in practice trades with real money. You can commit to trading 6, 8, or 10 micro lots and then work your way up to full-size lots if everything goes as planned.
Every trader has access to real money trading of up to two micro lots using a stop order, allowing them to continue testing their forex trading method while retaining a moderate amount of risk exposure. Micro lot trading gives you far more flexibility in the management of your trades than dealing with small lots or even conventional lots.
- Greatest Utility in Determining Position Size and Using Leverage
Micro lots represent a good starting point for practicing position size in a live trading environment because of the low degree of risk they entail. Learning about leverage and margin may be simple while trading micro-lots. It’s as simple as keeping an eye on your account balance during a real-time micro lot trade. Live micro lot trading allows you to monitor your account balance, equity, margin amount, free margin, and profit and loss values in real time. You can learn a lot from this that will help you in actual trading situations in the future.
The Bottom Line
Keep a nano-lot account open even if you become profitable enough to trade normal lots with a different broker. It can be used as a test tool or to help you get back on your feet after a losing streak. When dealing with actual transactions, the advantages of micro lot trading in foreign exchange become readily apparent. After getting some practice under your belt with demo trades, moving on to actual micro lots will help you learn and apply advanced strategies like profit management. The usage of tiny lots is permitted even for substantial trades. open demo trading account