Pips, Lots & Leverage

A pip (Percentage in Point) is the smallest standard price movement in forex. For most pairs, it's the 4th decimal place: a move from 1.0850 to 1.0851 is 1 pip. For JPY pairs, it's the 2nd decimal (110.50 to 110.51).

Trades are measured in lots. A Standard lot = 100,000 units, Mini lot = 10,000 units, Micro lot = 1,000 units. On a standard lot in EUR/USD, 1 pip = $10. On a micro lot, 1 pip = $0.10.

Leverage lets you control a large position with a small deposit (margin). With 1:100 leverage, $1,000 in your account controls $100,000. This amplifies both profits AND losses — it's a double-edged sword.

Margin is the deposit required to open a leveraged position. If your losses approach your margin, you get a margin call — the broker may close your positions. Always know your margin level and never risk more than you can afford.