Thursday, October 2, 2008

Basics for newbies

What is pip?

A pip is the smallest price increment in forex trading - pip stands for percentage in point. For example EUR/USD is quoted at 1.4502 bid and 1.4505 ask. In this case the spread (difference between bid and ask) is 3 pips.
Each pip is worth $10 in the Standard size contract and $1 in a mini contract.

What is a Lot?
Spot Forex is traded in lots.
The standard size lot is $100,000.
There is also a mini lot size and that is $10,000.

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