Pips, Points, Lots, and Pip Value

A pip is the smallest commonly used unit of price change. On most forex pairs, 1 pip = 0.0001. On XAUUSD, 1 pip is usually counted as a 0.1 move (ten cents), although some brokers count it per 1 dollar.

Lots

• 1.00 lot = standard size (100,000 units of the base currency / 100 oz of gold at many brokers).
• 0.10 lot = mini.
• 0.01 lot = micro — the smallest common size, suitable for practice.

Pip value

The bigger the lot, the more money each pip of movement is worth. A rough example for XAUUSD at many brokers: 0.01 lot ≈ USD 0.10 per 0.1 move; 0.10 lot ≈ USD 1; 1.00 lot ≈ USD 10.

You do not need to memorize this — what matters is understanding the relationship: the lot size determines how quickly your balance changes for the same price movement.

Key points

• Pip = unit of price movement. Lot = position size. Pip value = lot × unit.
• Start with 0.01 lot until your process is consistent.