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Lot

This is the amount invested per trade.It may also be referred to as contract size.

The standard size for a lot is $100,000. In the last few years a mini lot size has been introduced of $10,000. Currency spot prices change in pips, which are the smallest increment of that currency.
Because these increments are tiny it is desirable to trade large amounts to get larger returns.

This is where leverage comes into the picture. What is leverage?

Leverage

Leverage is a way in which a trader can control a large market position as compared to his actual capital investement. It can be compared to trading stocks on the margin. A trader with only $100 can command a market position of $10000 using a leverage of 1:100

Mathematically leverage is the ratio of the the lot to the actual capital invested.
Typical leverage varies from 1:100 – 1:400.

Minimum capital requirements for some brokers start from $100 allowing one to trade lots of $10,000. Some brokers such as Easy-Forex allow trading with a $25 margin for lots of $10000 on a 1:400 gearing.

An early word of caution: Leverage is a double edged sword that can result in high profits or high losses.

 

Day Trading / Rollover

Day Trading is when a trader buys and sells his lots or stocks within a single day. He is in and out of the market that same day. He does not hold his position open overnight or for a week, etc.

The trading day ends at 3:00 pm ET. All positions that remain open after this time are considered to have rolled over to the next day. Interest is charged on all positions that are open after this time.If you are long on the currency interest is charged on your account. If you are shorting a currency the interest is credited to your account

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