LMAX Introduce "Micro Lots"
Last weekend LMAX quietly announced to those of their customers carrying trades over the weekend that they were introducing what MetaTrader brokers refer to as micro-lots on their spot forex contracts. Whichever way you look at it, that title is something of a misnomer, but we'll explain what it means to a client of LMAX.
A "full lot" at LMAX is a mere 10,000 units of the underlying currency, compared to 100,000 at the average MetaTrader broker, or even 1 million at Dukascopy. From this week you can now enter a minimum size of 0.1 into an LMAX Trader order ticket, or 1,000 units. That's what MetaTrader brokers describe as a micro-lot for reasons known only to themselves, since anywhere else in the known universe apart from MetaTrader land micro means a millionth.
"Micro-lots" now available via LMAX Trader
Be that as it may, there is a peculiarity about these new LMAX one tenth lots. You pay almost as much commission as you would on a full lot! For example, on GBP/USD a tenth lot trade will cost you 35 cents whereas a full lot will cost you 40. This is not really a very attractive option for traders wishing to start small by trading micro lots, but it does add extra granularity to position sizing for those traders happy to trade LMAX full lots and more. The mass of MetaTrader micro brokers still don't have anything to fear from LMAX, for the moment at least.
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Comments on LMAX Introduce "Micro Lots"
Hi Jim,
It seems LMAX has reduced the commissions on micro lots. On EURUSD for example they charge $0.03 for 0.1 contract vs $0.32 for 1 contract. Haven't checked for other currencies but I guess they have adjusted there too.
On the down side they have increased the minimum deposit to open an account to $10,000 (!). Not sure why anyone with that kind of money would want to trade micro lots but for those out there who opened their account in the early days of LMAX, when $500 deposit was enough, and are still running a small account then using micro lots could have some value now.