Glossary
Lot
Forex
A lot is the standardised trade size in forex: a standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000.
Lot size determines pip value and therefore how much each price move is worth. On a USD-quoted pair, one pip is roughly $10 per standard lot, $1 per mini lot and $0.10 per micro lot.
Position sizing works backwards from risk: divide the cash you are willing to lose by (stop distance in pips x pip value per lot) to get the correct lot size. Trading fixed lot sizes regardless of stop distance is one of the most common causes of inconsistent results.