A lot is the standard package of currency units you buy or sell in one trade. A standard lot is 100,000 units, a mini lot is 10,000 units (0.10 lot), and a micro lot is 1,000 units (0.01 lot). Your lot choice decides how much each pip is worth, so it directly controls how much money is at risk.
Trading 1 standard lot of EUR/USD means roughly $10 per pip. Drop to a 0.10 mini lot and the same pip is worth about $1 — smaller size, smaller risk.
This definition is for educational purposes only and is not financial advice. Trading involves risk.