Every day, thousands of people around the world invest in Australian forex. Whether they manage their accounts or work for a large institution, most traders need to know about pips and lots when conducting their business.
Pips are the smallest unit of measurement used in foreign exchange trading. They are the equivalent of 1/100th of one per cent, also expressed as 0.0001 (1/10). For example, if you see that EURUSD has moved 0.4554 pips, it means that the euro’s value against the US dollar has gone up by 4.55400 points since the opening price.
If you want to calculate how much money you have made or lost, you need to multiply this value by the size of your position.
Lots (also called lots sizes, contract size and nominal) define the amount of base currency per trade. For example, if your broker offers 10k lots, then you control a position … Read More