Forex Trading Basics

Forex trading means speculating on currency pairs, usually with heavy leverage. Here is how pips, lots and leverage work, what U.S. rules allow and why most beginners should be cautious.

Pips and lots

A pip is the standard small unit of change in a currency pair: 0.0001 for most pairs and 0.01 for yen pairs. A standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000. On a standard lot of EUR/USD, one pip is worth $10.

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