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Pips, pipettes and lots
Two traders see the same ten-pip move and get different results. Position size helps explain why.
Translate price changes into pips and distinguish price units from position size.
A pip is a conventional unit for expressing a currency pair's movement. For many pairs it is 0.0001; for many yen quotes it is 0.01. A pipette is commonly one tenth of a pip. Verify the instrument instead of guessing from the screen.
A lot describes quantity, not a prediction or risk limit. In common retail FX conventions, one standard lot represents 100,000 base units; a mini is 10,000 and a micro is 1,000. Brokers and other products may use different specifications.
Pip value depends on quantity, pair and account currency. First calculate its value in the quote currency, then convert if necessary. The same lot size can have different monetary risk when stop distance or currency conversion changes.
Let’s use numbers · hypothetical example
For EUR/USD with a 0.0001 pip, EUR 10,000 has USD 1 per pip: 10,000 × 0.0001. A 12-pip adverse move therefore loses USD 12 before costs.
Keep in mind
Gold, indices and currency futures have their own contract and tick definitions; do not apply retail forex lot rules automatically.
Your turn
Calculate the quote-currency pip value for EUR 1,000 and EUR 20,000 using the stated pip size.
A quick check before we move on
Does a micro lot itself define a fixed maximum loss?
- No; distance, costs and execution also affect loss
- Yes; it always limits loss to one dollar
- Yes; every instrument uses identical units
Check answer
No; distance, costs and execution also affect loss Quantity is only one part of risk. Price movement, costs and product rules still matter.
Sources and further reading
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.
