ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A standard lot represents 100, 000 units of any currency, whereas a mini-lot represents 10, 000 and a micro-lot represents 1, 000 units of any currency. A one-pip movement for a standard lot corresponds with a $10 change.

Detailed explanation-2: -The pip value is $1. If you bought 10, 000 euros against the dollar at 1.0801 and sold at 1.0811, you’d make a profit of 10 pips or $10. On the other hand, when the USD is the first of the pair (or the base currency), such as with the USD/CAD pair, the pip value also involves the exchange rate.

Detailed explanation-3: -A standard lot refers to 100, 000 units of base currency and equates to $10 per pip movement. A mini lot is 10, 000 units of base currency and equates to $1 per pip movement. A micro lot is 1, 000 units of base currency and equates to $0.10 per pip movement.

Detailed explanation-4: -The majority of currency pairs have a standard pip value of 0.0001 and are measured to five decimal places. 1 lot is 100, 000 units of a currency. If you prefer to open smaller positions, you can choose to trade either mini lots (10, 000 units) or even micro lots (1000 lots).

Detailed explanation-5: -To calculate pip value, divide one pip (usually 0.0001) by the current market value of the forex pair. Then, multiply that figure by your lot size, which is the number of base units that you are trading.