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"What Are Pips and Lots in Forex? A Clear Explanation for Traders"

New to forex trading? Learn how pips and lots work u2013 the essential building blocks of every trade. This guide breaks down:<br><br>

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"What Are Pips and Lots in Forex? A Clear Explanation for Traders"

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  1. Understanding Pips & Lots in Forex Trading The Building Blocks of Forex Market Calculations www.xtrememarkets.com

  2. What is a Pip? Percentage in Point" (PIP) – Smallest price move a currency pair can make Example: EUR/USD moves from 1.1050 → 1.1051 = 1 pip change www.xtrememarkets.com

  3. Pip Value Calculation EUR/USD at 1.1050, trading 1 standard lot (100,000 units): (0.0001 / 1.1050) × 100,000 = $9.05 per pip www.xtrememarkets.com

  4. What Are Lots? Standard 100,000 ~$10 per pip Mini 10,000 ~$1 per pip Micro 1,000 ~$0.10 per pip Nano 100 ~$0.01 per pip www.xtrememarkets.com

  5. Why Does This Matter? Risk Management: Smaller lots = Lower exposure Profit Potential: Standard lots amplify gains (and losses) Strategy Fit: Scalpers → Micro lots | Swing traders → Standard lots www.xtrememarkets.com

  6. Real-World Example Buy 1 standard lot EUR/USD at 1.1050 Price rises to 1.1070 (20 pips) Profit: 20 pips × 10=∗∗10=∗∗200** www.xtrememarkets.com

  7. Key Takeaways Pips measure price movement Lots determine trade size Smaller lots = Lower risk Always calculate pip value before trading www.xtrememarkets.com

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