What Are Pips, Lots, and Leverage in Forex Trading?

 Understanding these concepts is essential for every trader.

Pips

A pip is the smallest price movement in a currency pair. It helps measure profit or loss.

Lots

A lot represents the size of your trade:

  • Standard lot = 100,000 units
  • Mini lot = 10,000 units
  • Micro lot = 1,000 units

Leverage

Leverage allows you to control a large position with a small amount of capital.

Example:
With 1:100 leverage, $100 controls $10,000.

⚠️ While leverage increases profit potential, it also increases risk significantly.

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