FundedMinds
A pip is the standard price increment. For most pairs that is the fourth decimal place (0.0001); for JPY pairs it is the second (0.01).
A 'lot' is the size of the trade. A standard lot is 100,000 units of the base currency, a mini lot is 10,000, and a micro lot is 1,000. The smaller the lot, the smaller the risk per pip.
Leverage lets you control a large position with a small margin. 1:100 leverage means a $1,000 margin controls a $100,000 position. Leverage does not create more capital; it multiplies the size and the risk.
The smarter number to track is risk per trade in currency terms, usually a fixed percentage of your account. If you risk 1% per trade, you can survive many losing trades in a row.
On a prop evaluation you are usually trading a simulated account with a set capital size. Your position sizing must respect both your daily and your maximum drawdown limits.
Always calculate the size from the stop distance and your risk percentage, never from a gut feeling of 'how much to put in'.
Takeaways
- A pip is the standard increment; a lot is the trade size (standard/mini/micro).
- Leverage multiplies position size and risk, it does not create capital.
- Size your position from the stop distance and a fixed % risk, not intuition.
Self-check
Why is fixed % risk per trade important?
It makes any single loss survivable so a bad streak does not end the account.
Trading involves risk. Educational only, not advice. Mark it complete to bank progress.