Course 2 of 5 · Beginner · 19 min
Costs, pricing and position size
How to read a quote, what one pip is worth at your size, and how leverage changes the amount of your balance that is on the line.
Course overview
Description
Most new accounts are not lost to bad calls. They are lost to positions that were larger than the trader realised, because nobody worked out what a normal move was worth before opening.
This course fixes that in order: read the quote, understand what a pip is, convert it into money at your position size, then see what leverage does and does not change.
It ends on the mechanics of a margin call and a stop-out, worked through to the pip on an ordinary day’s range.
Example lesson: what a 10-pip move actually costs
A pip is a distance, not an amount. What it is worth to you comes entirely from the size of the position, and that is the number you control.
On a dollar-quoted pair the arithmetic is fixed and worth memorising, because it is the same on every trade you will place.
The market decides how many pips it moves. You decide what each pip is worth.
| One pip on a dollar-quoted pair | |
|---|---|
| 1.00 lot (100,000 units) | about $10 |
| 0.10 lots (10,000 units) | about $1 |
| 0.01 lots (1,000 units) | about $0.10 |
Check your understanding
3 questions. Nothing is recorded and nothing is sent anywhere — the answers are checked in your browser.
A trade opens showing a small loss before the market has moved. Why?
You buy at the ask and the position is immediately valued at the bid. The gap between them is the spread.
Does moving from 1:100 to 1:500 leverage change what one pip is worth?
Leverage changes how much margin is held, and therefore the maximum size you can open. Pip value comes from contract size and lots.
What does a margin call do?
The margin call is a warning and a restriction. The stop-out is the one that closes positions, and it is not optional.
Practise it before it costs anything
A demo account runs the same platform on the same live prices, with nothing at stake.
