### Lot sizes

Transactions can be conducted via standard, mini, micro or variable lot sizes:
##### STANDARD LOT SIZES:
The standard lot sizes accounts for a 100,000 units of the base currency. (The amount of margin required to open a standard lot varies depending on the leveraged (margin) used, we will get to that in a moment).
##### MINI LOT SIZES:
The mini lot size accounts for 10,000 units of the base currency (ten times smaller than the standard lot size).
##### MICRO LOT SIZES:
The micro lot size accounts for 1,000 units of the base currency (ten times smaller than the mini lot size and a hundred times smaller than the standard lot size).
##### VARIABLE LOT SIZES:
Some brokers allow you to fix the position size based on your needs as a trader. For instance you could trade a position size of 234,644 or 5,869 units of the base currency.
Let’s see some numbers…
A trader goes long EUR/USD at 1.4530
Standard lots: the trader is buying 100,000 Euros at 145,300 US Dollars
Mini lots: our trader is buying 10,000 Euros at 14,530 US Dollars
Micro lots: our trader is buying 1,000 Euros at 1,453 US Dollars

### Pips

A pip is the minimum incremental move a currency pair can make. Pip stands for “price interest point.” For most currencies a pip is one 10,000th of the rate (1/10,000). The only exception of the seven majors is the USD/JPY (and other currency pairs where the JPY is involved, EUR/JPY, GBP/JPY, etc.) where the value of one pips is one 100th (1/100).
In the EUR/USD a move from 1.2532 to 1.2553 is equivalent to 21 pips while in the USD/JPY a move from 110.05 to 111.10 is equivalent to 105 pips
##### CALCULATING PIP VALUES
Although most trading platforms calculate the pip value automatically, it is important to know how it is obtained.
In the case of the USD/JPY the calculation is as follows:
In the yen, .01 equals to 1 pip.
USD/JPY rate = 116.87
.01/116.87 = .000086 *
*This result is the value of one pip in a contract size of 1, if we traded standard lots, then .000086 x 100,000 = 8.6 USD per pip.
In the case of the EUR/USD the calculation is as follows:
In the Euro, .0001 equals to 1 pip.
EUR/USD rate = 1.2316
.0001/1.2316 = .000081*
*This is the value per pip if we traded a contract size of 1.
NOTE: This is the pip value in Euros, (always in terms of the base currency). To convert it to USD we need to add one more step:
.000081 times the exchange rate. This would be:
.000081 x 1.2316 = .000099 rounds to .0001* (as we left out some decimals in our prior calculation).
*Again, this is the value for a contract size of 1, if we traded mini lots, then .0001 x 10,000 = 1 USD per pip. (For standard lots it would be 10 USD per pip).
Hey, did you notice we first divided .0001/1.2316 = .000081 and then we multiplied the result this way: 0.000081 x 1.2316 = .000099. So, would it be correct to avoid both calculations as they cancel each other? Absolutely, so you only need to multiply the pip value times the contract size to get the value of each pip! Hey, but remember, this is only good for currency pairs where the USD is the counter currency.
HINT: When trading any pair where the USD is the counter currency (direct currency pairs) such as: EUR/USD, GBP/USD, NZD/USD, etc. Each pip always has a value of US\$10 for standard lots and US\$1 for mini lots.

Bid is the price a dealer (our broker) is prepared to buy at, the trader (we) is to sell at this price.
Ask (or offer) is the price a dealer is prepared to sell at, and the trader (we) is to buy at this price.
Currency prices are commonly quoted in the following way:
EUR/USD 1.2528/31 spread = 3 pips
The bid quote is 1.2528
Replace the last two digits (31) in the left quote (28) to obtain the ask quote:
For currency pairs and crosses where the JPY is involved it changes a bit:
USD/JPY 116.45/48 spread = 3 pips
Bid: 116.45