Before placing any order you need to read three numbers correctly. Misreading any one of them is the most common reason a beginner's position ends up far larger than intended.
Pip
A pip is the smallest standard price increment for a currency pair. For most pairs it is the fourth decimal place (0.0001). For pairs quoted against the Japanese yen it is the second decimal place (0.01).
Lot
Lot size defines how much currency one unit of your order controls.
- Standard lot = 100,000 units of the base currency
- Mini lot = 10,000 units
- Micro lot = 1,000 units
Leverage
Leverage is the ratio between your position size and the margin you post. At 1:100, controlling a 100,000 position requires 1,000 of margin. Leverage multiplies both gains and losses in equal measure.
Higher leverage does not increase expected profit. It only reduces the margin required, which makes it easier to open a position larger than your account can absorb.