CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.
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What is a lot?
A lot is the standardised number of units of an asset being traded. Often, the actual value of an asset or security means that trading just a single unit isn’t viable. In these cases, traders will use a lot: a set amount of a particular asset that you buy or sell in each transaction. If the position size is not the standardised lot amount, it is considered an ‘odd lot’.
The value of a lot is set by an exchange, or a similar market regulator, and is usually the minimum number of units that you can buy of a particular financial instrument. This regulation means that investors always know how much of an asset they are trading when they open a position.
Examples of lots
A lot can refer to any asset class or financial instrument, but the specific meaning of a lot and its application will vary from market to market.
For example, the standard lot size for the stock market is 100 shares – it is the number of shares that are bought and sold in a normal transaction. This is also known as a ‘round lot’. Exchange traded funds (ETFs) are priced in the same way, so that one lot is equal to 100 shares.
The bond market is slightly different, because the lot sizes tend to be issued in far larger sums. For example, the standard lot for US government bonds is $1 million.
In options trading, lots are often standardised across the board. An equity option, for instance, is priced so that each lot is equal to 100 shares of the underlying asset. However, in the futures market lots are called ‘contract sizes’ instead – these vary greatly depending on what type of contract is being traded.
IG uses lots for CFD trading, where a single contract represents a set quantity of the underlying asset.
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Disclaimer:
All forms of investments carry risks and trading CFDs may not be suitable for everyone. CFDs are leveraged instruments and can result in losses that exceed deposits, so please ensure that you fully understand, and are aware of, the risks and costs involved. Refer to the Risk Disclosure Statement and Risk Fact Sheet.
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