Pips, Lots & Leverage
Master the units of measurement in forex trading
4 sections · 3 quiz questions · ~5 min read
Guided course path
Keep pips, lots & leverage inside the live track.
You are reading a reference lesson. The live course path gives you the lesson order, checks, saved progress, and next step. This starts with the basic market language before pips, lots, leverage, and broker mechanics.
Closest track: Market Foundations + Forex MechanicsFirst lesson: What a financial market is
What Is a Pip?
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).
Lot Sizes
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.
Understanding Leverage
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 & Margin Calls
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.
Quick check
Did it stick?
Try to answer each one before you peek at the explanation.
1
How much is 1 pip worth on a standard lot (100,000 units) of EUR/USD?
2
Leverage only amplifies profits, not losses.
3
With 1:50 leverage, how much capital does $2,000 control?