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📍 1. What Is a Pip?

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A pip (percentage in point) is the smallest price movement in a currency pair.

• In most pairs, 1 pip = 0.0001

  • Example: If EUR/USD moves from 1.1000 to 1.1001, that’s a 1 pip move

• For JPY pairs, 1 pip = 0.01

  • Example: USD/JPY moves from 145.50 to 145.51 = 1 pip

 

📘 Pips measure how much a pair moves — used to calculate profit and risk.

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💼 2. What Is a Lot?

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A lot is the amount of currency you are buying or selling.

🔹 Lot Sizes:

Lot TypeSize (Units)Value Per Pip

Standard Lot100,000 units~$10 per pip

Mini Lot10,000 units~$1 per pip

Micro Lot1,000 units~$0.10 per pip

 

💡 Choose the right lot size based on your account balance and risk tolerance.

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🧲 3. What Is Leverage?

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Leverage allows you to control a larger trade size with a smaller amount of money.

• Example: 100:1 leverage means for every $1, you can control $100.

• If you have $500 and 100:1 leverage, you can open a position worth $50,000

 

⚠️ Leverage can amplify profits, but also increase risk.
Always use with proper risk management.

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🔐 Key Takeaway:

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• Pips measure how much price moves

• Lots determine how big your trade is

• Leverage allows you to trade bigger — but be careful!