Pips and Lots

In trading (especially Forex), pips and lots are basic units used to measure price movement and trade size.

What is a Pip?

Pip = Percentage in Point
It is the smallest standard price movement in a currency pair.

Standard rules

• For most currency pairs:
  1 pip = 0.0001
  • Example: EUR/USD moves from 1.1000 → 1.1001 = +1 pip
• For JPY pairs:
  1 pip = 0.01
  • Example: USD/JPY moves from 145.20 → 145.21 = +1 pip

Some platforms show pipettes (fractional pips):

• 1 pip = 10 pipettes

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What is a Lot?

A lot measures the size of your trade (how much currency you are buying or selling).

Common lot sizes

Lot Type	Units of Base Currency
Standard lot	100,000 units
Mini lot	10,000 units
Micro lot	1,000 units
Nano lot	100 units (some brokers)

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Pip Value (Why Lots Matter)

The pip value depends on the lot size.

Example (EUR/USD)

Lot Size	Pip Value
1.00 lot	≈ $10 per pip
0.10 lot	≈ $1 per pip
0.01 lot	≈ $0.10 per pip

So:

• 20 pips profit with 1 lot ≈ $200
• 20 pips profit with 0.1 lot ≈ $20

Quick Summary

• Pip = how far price moves
• Lot = how big your trade is
• Pips × Lot size = Profit or Loss