Category: Forex Basics

If you trade forex, you will hear the word “pip” constantly — it is how profit, loss, spreads and risk are all measured. The good news: it is simple once you see it. This guide explains what a pip is, how to work out its value, and why it matters, with clear examples.

What is a pip?

A pip (“percentage in point”) is the smallest standard price move in a currency pair. For most pairs it is the 4th decimal place, or 0.0001.

For example, if EUR/USD moves from 1.0800 to 1.0801, that is a 1-pip move. From 1.0800 to 1.0850 is a 50-pip move.

Pips vs pipettes

Most modern brokers, including SCapitalFX, quote an extra decimal (the 5th) for more precision. That smaller unit is a pipette (one-tenth of a pip). So a price of 1.08005 shows 1.0800 (pips) plus a 5 (pipettes). When traders talk about moves and spreads, they almost always mean pips.

What about JPY pairs?

For pairs that include the Japanese yen (like USD/JPY), a pip is the 2nd decimal place (0.01) instead of the 4th, because the yen is quoted differently. So USD/JPY moving from 150.00 to 150.01 is a 1-pip move.

How much is a pip worth?

A pip’s cash value depends on your trade size (lot). For pairs quoted in US dollars, the standard values are:

Lot size	Units	Value of 1 pip
Standard lot (1.0)	100,000	$10
Mini lot (0.1)	10,000	$1
Micro lot (0.01)	1,000	$0.10

So if you buy 1 mini lot of EUR/USD and it rises 20 pips, that is 20 × $1 = +$20. The same 20-pip move on a micro lot is just $2 — which is why beginners start with micro lots.

Why pips matter

• Profit and loss are counted in pips.
• The spread (your main trading cost) is measured in pips — see what is the spread.
• Risk management works in pips: your stop-loss distance in pips, times your pip value, equals your money at risk.

At SCapitalFX, EUR/USD spreads start from just 1.0 pip on a Standard account and 0.0 pips on a Raw account — so you keep more of every pip you make. Compare them in Standard vs Raw.

Risk warning: Trading forex on margin carries a high level of risk and may not be suitable for everyone. You could lose some or all of your invested capital.

Frequently asked questions

What is a pip in simple terms?

It is the smallest standard price move in a currency pair — usually the 4th decimal place (0.0001) — and it is how profit and loss are measured.

How much is 1 pip worth?

About $10 per standard lot, $1 per mini lot, and $0.10 per micro lot for US-dollar-quoted pairs.

What is the difference between a pip and a pipette?

A pipette is one-tenth of a pip (the 5th decimal). Brokers show it for extra pricing precision.

How many pips is a good daily target?

There is no fixed number — focus on a positive risk-to-reward ratio (for example risking 20 pips to make 40) rather than chasing a pip count.

Put it into practice

Open an account or a free demo and watch pips add up in real time. New here? Start with our forex for beginners guide.

Leverage is one of the most powerful — and most misunderstood — tools in trading. Used wisely, it lets you trade meaningful positions with a small deposit. Used carelessly, it can drain an account fast. This guide explains exactly what leverage is, how it works with real examples, the risks, and how much you should actually use.

What is leverage in forex?

Leverage is borrowed buying power from your broker that lets you control a larger position than your own cash would allow. It is written as a ratio such as 1:200, which means every $1 of your money can control $200 in the market. At SCapitalFX you can trade with leverage up to 1:200 — so $500 could control a position worth up to $100,000.

What is margin? (leverage’s twin)

Margin is the flip side of leverage: the amount of your own money set aside to open a leveraged trade. The higher the leverage, the smaller the margin needed:

• At 1:200, margin = 0.5% of the position size
• At 1:100, margin = 1%
• At 1:20, margin = 5%

How leverage works: a real example

Say you want to trade 1 standard lot of EUR/USD (100,000 units) at a price of 1.0800. The full position is worth $108,000.

• Without leverage, you would need the full $108,000.
• At 1:200, you only need about $540 in margin ($108,000 ÷ 200).

Now see how it magnifies the result. If EUR/USD moves 1% in your favour, that is about +$1,080 — more than double your $540 margin. But a 1% move against you is -$1,080, far more than your margin. That is the double-edged nature of leverage: it multiplies profits and losses equally.

Leverage by asset class at SCapitalFX

Maximum leverage depends on the market, because some assets are more volatile than others:

Asset	Maximum leverage
Forex majors (EUR/USD, GBP/USD…)	1:200
Gold (XAU/USD)	1:100
Indices (US30, US500…)	1:50
Crypto (BTC, ETH)	1:20

More volatile assets get lower leverage to protect you from outsized swings.

Margin call and stop-out: the safety nets

If losses eat into your margin, two levels kick in to limit the damage:

• Margin call (100%): a warning that your equity has dropped to your used margin — top up or reduce risk.
• Stop-out (50%): if equity keeps falling to half your used margin, positions are closed automatically to prevent further losses.

These protect you, but never rely on them — always set a stop-loss yourself.

How much leverage should a beginner use?

The key insight: having access to 1:200 does not mean you should use all of it. The smart approach is to:

• Think in terms of risk per trade (1–2% of your balance), not maximum position size.
• Use leverage to free up capital — not to take giant positions.
• Always pair leverage with a stop-loss.

New to sizing trades? Read how to start trading with $10 and our forex trading for beginners guide, or compare account costs in Standard vs Raw.

Risk warning: Trading on leverage carries a high level of risk. It magnifies losses as much as gains, and you could lose your invested capital quickly. Use leverage responsibly and never risk money you cannot afford to lose.

Frequently asked questions

What does 1:200 leverage mean?

It means $1 of your money can control $200 in the market — so you only need about 0.5% of a position’s value as margin.

Is high leverage good or bad?

Neither by itself — it is a tool. It is helpful for capital efficiency but dangerous if you oversize positions. The risk comes from position size, not the leverage number alone.

How much margin do I need?

Divide the position value by the leverage. A $20,000 position at 1:200 needs $100 in margin; at 1:20 it needs $1,000.

Can I lose more than I deposit?

The stop-out level closes positions at 50% margin to limit losses, but fast markets can still cause large, rapid losses — which is why a stop-loss is essential.

What leverage is best for beginners?

Use small effective leverage while learning: trade micro lots, risk 1–2% per trade, and keep most of your balance unused.

Start trading the smart way

Open your account or a free demo and practise with sensible leverage before going bigger. Explore all markets and conditions when you are ready.

Forex is the largest financial market in the world, with trillions of dollars changing hands every day. The good news for newcomers: the basics are simpler than they look. This beginner’s guide explains how forex trading works, the key terms you need, and exactly how to place your first trade — the right way.

What is forex trading?

Forex (foreign exchange) trading is the act of buying one currency while selling another, in the hope that the exchange rate moves in your favour. Currencies are always traded in pairs, such as EUR/USD (euro vs US dollar). If you think the euro will rise against the dollar, you buy EUR/USD; if you think it will fall, you sell it.

Beyond currencies, most brokers — including SCapitalFX — also let you trade metals (like gold), indices, energy (like oil) and crypto using the same account. In total you can trade 34 instruments at SCapitalFX.

The key terms every beginner needs

• Currency pair: two currencies quoted together, e.g. GBP/USD. The first is the base, the second is the quote.
• Pip: the smallest standard price move, usually the 4th decimal place (0.0001). It’s how profit and loss are measured.
• Spread: the small gap between the buy (ask) and sell (bid) price. This is your main trading cost on a Standard account.
• Lot: the size of your trade. A standard lot is 100,000 units; a micro lot (0.01) is 1,000 units — ideal for beginners.
• Leverage: borrowed buying power that lets you control a larger position with a smaller deposit (e.g. 1:200). It magnifies both profits and losses.
• Margin: the deposit required to open a leveraged position.
• Going long / short: buying (long) if you expect a rise, selling (short) if you expect a fall.

How a forex trade actually works

Imagine EUR/USD is priced at 1.0850. You believe the euro will strengthen, so you buy one micro lot. If the price rises to 1.0860, that’s a 10-pip gain. On a micro lot each pip is worth about $0.10, so your profit would be roughly $1. If the price instead falls to 1.0840, you’d be down about $1. Scale the lot size up and those numbers grow — in both directions. That’s why position sizing and risk control matter so much.

What moves the forex market?

• Interest rates set by central banks
• Economic data such as inflation, employment and GDP
• Geopolitics and global risk sentiment
• Supply and demand for each currency

You don’t need to predict all of this. Most beginners do better focusing on a few pairs and a simple, repeatable strategy than trying to follow everything at once.

How to start trading forex (step by step)

1. Open an account. Create your SCapitalFX account and verify your identity.
2. Choose your account type. Beginners usually start with a Standard account (from $10). As you get more active, a Raw account can lower costs — compare them in Standard vs Raw.
3. Practice on a demo. Learn the platform and test ideas with virtual money first.
4. Fund your account. The quickest low-cost method is crypto — see how to fund with USDT, BTC and 50+ coins.
5. Place your first trade. Start with a micro lot, set a stop-loss and a take-profit, and keep your risk tiny while you learn. Our $10 starter guide walks through this.

Risk management: the part that keeps you in the game

More beginners fail from poor risk control than from bad market calls. Build these habits from day one:

• Risk only 1–2% of your balance per trade.
• Always use a stop-loss — decide your exit before you enter.
• Keep leverage modest. The ability to use 1:200 doesn’t mean you should max it out.
• Have a plan for every trade: entry, stop, target, and position size.

Common beginner mistakes to avoid

• Trading too big for the account size
• Skipping the stop-loss
• Revenge trading after a loss
• Chasing every market move instead of waiting for good setups
• Risking money you can’t afford to lose

Trading on your phone

You can do all of this from the SCapitalFX mobile app, with live charts, multiple timeframes and instant execution. See what to look for in a good forex trading app.

Risk warning: Trading forex and CFDs on margin carries a high level of risk and may not be suitable for every investor. You could lose some or all of your invested capital. Make sure you understand the risks and never trade with money you cannot afford to lose.

Frequently asked questions

How much money do I need to start forex trading?

At SCapitalFX you can start a Standard account from $10, so you can begin with a very small amount while you learn.

Is forex trading hard for beginners?

The mechanics are simple to learn, but trading well takes practice and discipline. Starting on a demo and using small sizes shortens the learning curve.

What is the best currency pair for beginners?

Major pairs like EUR/USD are popular with beginners because they are liquid and have tight spreads.

Can I lose more than I deposit?

Trading on leverage is risky and losses can be rapid. Use stop-losses, keep positions small, and only trade with money you can afford to lose.

Ready to begin?

Open your free account or demo and put this guide into practice. Explore all trading conditions and instruments to see what you can trade.

You don’t need thousands of dollars to begin. At SCapitalFX you can open a Standard account from just $10, which makes it one of the most affordable ways to start trading forex. But starting small the right way matters — this guide shows you how to start forex trading with $10 and actually learn something, instead of blowing the account on day one.

Can you really start forex with $10?

Yes. A $10 deposit is enough to open a live Standard account and place real trades using micro lots (0.01 lots). A small account won’t make you rich quickly, but it is perfect for one thing that is valuable: learning to trade with real money and real emotions, at a risk level you can afford.

Step 1: Open and fund your account

1. Create your account. Sign up at SCapitalFX and complete verification.
2. Choose Standard. It has no commission and the lowest $10 entry — ideal for a small starting balance. (See Standard vs Raw accounts for the difference.)
3. Deposit. The fastest low-cost option is crypto — you can fund from $10 with USDT, BTC and 50+ coins.

Step 2: Understand what $10 can actually do

With leverage up to 1:200, a $10 balance can control more than $10 of currency — but leverage cuts both ways. The realistic approach with a micro account is to trade the smallest size (0.01 lots) and accept that profits and losses will be measured in cents at first. That is exactly what you want while you are learning.

Think of your first $10 as the cost of a trading education, not a get-rich scheme. Traders who treat a small account seriously — keeping records, following a plan — are the ones who are ready when they scale up.

Step 3: Protect your account with risk management

• Risk a tiny amount per trade. A common rule is to risk only 1–2% of your balance on any single trade. On a small account that means very small positions and tight stop-losses.
• Always use a stop-loss. Decide your exit before you enter. It removes emotion and caps the damage.
• Don’t over-leverage. Just because you can open a large position doesn’t mean you should. High leverage is the fastest way to lose a small account.
• One or two trades at a time. Focus beats spraying trades across the market.

Step 4: Practice on a demo first

Before risking even $10, run a free demo account to learn the platform, test your strategy and get comfortable placing, modifying and closing trades. When your demo results are consistent, switch to live with your $10.

Step 5: Grow slowly and add as you learn

The goal of a $10 account isn’t to turn it into $10,000 — it’s to build good habits. As your skills improve, you can top up your balance, increase position sizes gradually, and eventually move to a Raw Spread account for tighter costs once you trade more actively.

Risk warning: Trading forex and CFDs on margin carries a high level of risk and may not be suitable for every investor. You could lose some or all of your invested capital. Never trade with money you cannot afford to lose.

Frequently asked questions

Is $10 enough to make money in forex?

It is enough to trade and learn, but realistic profits on $10 are very small. The real value early on is education and building discipline — not income.

What can I trade with $10?

You can trade micro lots (0.01) across forex, metals, indices, energy and crypto. Lower-priced, lower-margin instruments are easier to size on a small balance.

How do I deposit just $10?

Crypto is the simplest low-amount method. See our crypto funding guide.

Should I use high leverage to grow faster?

No. High leverage magnifies losses just as much as gains and is the most common reason small accounts are wiped out. Keep positions small.

Start with $10 today

Ready to begin? Open your $10 Standard account, practice on demo first, and take your first steps the smart way. For the fundamentals, read our forex trading for beginners guide.