Spread, pip, lot, leverage

Key idea: leverage does not change profit per pip — it only lets you trade bigger than your money.

Four must-know terms

• Spread = ask − bid: the first cost.
• Pip = 0.0001 (JPY pairs: 0.01).
• Standard lot = 100,000 units · 0.1 lot EURUSD ⇒ 1 pip ≈ 1 USD.
• 1:100 leverage = margin of 1% of the trade value.

Example

1 lot of EURUSD at 1.1000 = 110,000 USD ⇒ margin ≈ 1,100 USD.