KoboFX

Pips and Lots: The Two Numbers That Control Your Risk

SchoolPreschool01/01/2026
Portrait of Iriss Lee
By Founder & Editor3 years trading forex. Writes every KoboFX guide and review. Full profile →

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 money. If you do not, one trade can wipe your account.

PIPSprice move — 0.0001LOTStrade size — micro first$
Two dials set your risk in dollars. Pips measure the price move, lots measure your size. Turn either up and the $ cost of one trade rises.

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 cent accounts)

New traders should start with cent or micro lots. One wrong move then costs cents, not rent money.

Standard$10 / pip$200 per 20 pipsMini$1 / pip$20 per 20 pipsMicro$0.10 / pip$2 per 20 pipsCent$0.01 / pip$0.20 per 20 pips
Lot size sets the cost of every pip. A 20-pip stop on standard costs about $200. On micro it costs about $2. Bars are illustrative, not to scale.

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 $2).
  • Same 20 pips with a standard lot ($10 per pip) → risk is $200 (about $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, see How to Deposit from GTBank and Access Bank and USDT via Binance P2P.

Bottom line: Understand pip 0.0001 and lot size controls risk, use micro lots, or you risk a 20-pip move costing $200. Related guides: Forex Funding and Payments. Linked From: Forex Funding and Payments, Starting Forex as a Beginner.