Pips and Lots: The Two Numbers That Control Your Risk

Risk warning: Pips and lots control how fast you gain or lose. This is education, not financial advice. Start small. You can lose money.

Two small numbers control your risk. Pip and lot.

If you understand them, you protect your ₦. If you do not, one trade can wipe your account.

What is a pip?

A pip is a tiny price move.

For most pairs, a pip is 0.0001.

Example: EUR/USD moves from 1.0800 to 1.0801 — that is 1 pip.

For pairs with yen (like USD/JPY), a pip is 0.01.

Brokers also show pipettes (0.1 pip). Do not worry about them for now.

What is a lot?

A lot is the size of your trade.

• Standard lot = 100,000 units — about $10 per pip on EUR/USD
• Mini lot = 10,000 units — about $1 per pip
• Micro lot = 1,000 units — about $0.10 per pip
• Cent lot = 100 units — about $0.01 per pip (shown as cents in many Nigerian accounts)

New traders in Lagos and Abuja should start with cent or micro lots. One wrong move then costs kobo, not rent money.

Pips + lots = your risk

Risk depends on both:

• How many pips you risk (your stop loss)
• How many lots you trade

Example:

• You risk 20 pips with a micro lot ($0.10 per pip) → risk is $2 (about ₦3,000).
• Same 20 pips with a standard lot ($10 per pip) → risk is $200 (about ₦300,000 / ~$200).

Small lot + small stop = small risk.

What to do next

Learn to match lot size to your risk. See Position Sizing: Matching Lot Size to Your Risk and The 1% Rule: Risk Small to Stay in the Game.

For how to fund a small account from Nigeria, see How to Deposit from GTBank and Access Bank and USDT via Binance P2P.

Rate used: ~₦1,500 / $1. Small amounts like ₦150 use same rate.

Bottom line: Understand pip 0.0001 and lot size controls risk, use micro lots, or you risk a 20-pip move costing ₦300,000 / ~$200. Links To Guides: Pillar 2 (Money). Linked From: Pillar 2 (Money), Pillar 3 (Beginner Setup).