What is a Pip?

A ‘Pip’ is a unit of measurement that expresses the smallest change in the value between two currencies.

If EUR/USD moves from 1.1055 to 1.1056, that .0001 USD rise in value is 1 pip.

For almost all pairs, a pip is the fourth digit after the decimal point. A popular exception is the Japanese yen, where a pip is a change in the second digit after the decimal point.

This is an example of how pair quotes are displayed. Check out the pip for each pair which is highlighted below:

GBP/CAD = 1.65723

USD/JPY = 110.890

EUR/USD = 1.13455

What are Lots?

A Lot is a unit that’s used to measure the amount of currency units being traded by a trader. Whenever you place an order to trade a position, the order will be quoted in lot sizes.

The standard size for a lot is 100,000 units of currency, but there are other lot sizes – mini, micro, and nano lots. A mini lot size is 10,000 units, a micro is 1,000 units, and a nano is 100 units. These smaller lot sizes are great for new traders who want exposure in the market by using a much smaller amount of capital while minimising the potential losses.