Lot Size, Leverage and Margin

Lot size is how much you trade. Margin is the deposit your broker holds while the trade is open. Leverage is the ratio that decides that deposit. Only lot size and stop distance decide what you can lose.

Trading BasicsBeginner9 min read16 Oct 2026

Sample content, pending review by Bangrazka

Learning objectives

Define lot, margin and leverage precisely
See why high leverage does not mean high risk by itself
Read the margin level on your platform

Lot size

One standard lot is a fixed contract size set by the broker. A mini lot is 0.10 and a micro lot is 0.01 of that size.

Margin and leverage

With 1:100 leverage the broker holds 1% of the position's value as margin. With 1:500 it holds 0.2%. The position, and the money each price move costs you, is the same in both cases.

Leverage becomes dangerous when it lets you open positions far larger than your risk plan allows. The danger is the size, not the ratio.

Chart example

Illustrative diagram, not real market data.

Practical example

Two traders each buy 0.10 lots of gold, one at 1:100 and one at 1:500 leverage. They post different margin, but a $5 move costs each of them exactly $50.

Video lesson

The video for this lesson will be added here.

Common mistakes

Choosing lot size from free margin instead of a risk plan
Believing lower leverage makes the same trade safer
Ignoring margin level until a margin call

Key takeaways

Lot size and stop decide the loss
Leverage decides the deposit
Size from your risk plan, never from free margin