Lot and Pip
What is a Pip?
Pip is the term used in currency market to represent the smallest price increment in a currency. Pips are referred to as ticks or points in the market. For example, when the value of the EUR/USD pair goes up by one tick the quote will move from 1.2353, to 1.2354, the size of this movement is one pip. An important guideline for a new trader is to measure success or loss in an account by pips instead of the actual dollar value. A one pip gain in a $10 account is equal, in terms of the trader’s skill, to a 1 pip gain in a $1,000 account, although the actual dollar amount is very different.
Pip is the term used in currency market to represent the smallest price increment in a currency. Pips are referred to as ticks or points in the market. For example, when the value of the EUR/USD pair goes up by one tick the quote will move from 1.2353, to 1.2354, the size of this movement is one pip. An important guideline for a new trader is to measure success or loss in an account by pips instead of the actual dollar value. A one pip gain in a $10 account is equal, in terms of the trader’s skill, to a 1 pip gain in a $1,000 account, although the actual dollar amount is very different.
What is a Lot?
The smallest size in currency trading for professional traders is called a lot. A lot refers to a bundle of units in trade. It essentially refers to the size of the trade that you are making. For USDbased pairs, the lot size is 100,000. In other words, when you enter a trade with your margin account, the smallest amount that you can buy or sell is 100K, regardless of the size of your margin.
The smallest size in currency trading for professional traders is called a lot. A lot refers to a bundle of units in trade. It essentially refers to the size of the trade that you are making. For USDbased pairs, the lot size is 100,000. In other words, when you enter a trade with your margin account, the smallest amount that you can buy or sell is 100K, regardless of the size of your margin.
