Round Lot

A round lot is a standard trading unit of a security, typically 100 shares. The term is used in both the stock and futures markets.

In the stock market, a round lot is typically 100 shares of a stock. However, some stocks may have a different round lot size, such as 50 shares or 200 shares. The round lot size for a particular stock can be found on the stock's listing page on a stock exchange website.

When trading stocks, investors typically buy and sell in round lots. This is because most brokerage firms charge a commission for each trade, and the commission is typically based on the number of shares traded. Therefore, it is more cost-effective to trade in round lots.

In the futures market, a round lot is typically one contract. However, some futures contracts may have a different round lot size, such as two contracts or five contracts. The round lot size for a particular futures contract can be found on the contract's listing page on a futures exchange website.

When trading futures, investors typically trade in round lots. This is because most futures exchanges require that contracts be traded in round lots. Additionally, most futures brokerage firms charge a commission for each trade, and the commission is typically based on the number of contracts traded. Therefore, it is more cost-effective to trade in round lots.

Round lots are important because they represent the standard trading unit for stocks and futures. This makes it easier for investors to compare prices and trade securities.