Beginner Guide
Forex basics: pips, leverage, and lots
Before your first trade, understand the three terms that control your risk: pips (movement), leverage (exposure), and lot size (position size).
Think of pips as your measuring unit, leverage as your amplifier, and lot size as the volume knob. If one is too high, losses can become stressful quickly.
The safest approach for beginners is to start with small position sizes and pre-defined risk on every trade. Build consistency first, then increase size.
FAQ
What is a pip in forex?
A pip is a small unit of price movement in a currency pair. Beginners use pips to measure profit, loss, and stop-loss distance.
Why is leverage risky for beginners?
Leverage increases position size relative to your capital, so both wins and losses are magnified. Without strict risk limits, losses can grow quickly.
What lot size should a beginner use?
Most beginners should start with small sizes and limit risk per trade. Position size should be based on account size, stop distance, and risk tolerance.