Forex Basics: Pairs, Pips and Lots
Why currencies trade in pairs, how to read EUR/USD 1.0900, and what a pip is worth.
Written and reviewed by the Fundezy team · how we produce this
The foreign exchange market (forex or FX) is where one currency is exchanged for another. You never buy "the euro" — you always buy one currency against another: EUR/USD is the price of 1 euro measured in US dollars.
Base and quote
In EUR/USD:
- Base currency = EUR (what you are buying or selling)
- Quote currency = USD (what you pay with)
A quote of 1.0900 means 1 euro costs 1.09 US dollars. If you buy EUR/USD, you are long the euro and short the dollar simultaneously.
Pips
A pip is the standard smallest price increment — the fourth decimal place for most pairs (1.0900 → 1.0901 is one pip). For yen pairs like USD/JPY, the pip is the second decimal because the yen's unit value is much smaller. Many modern quotes show a fifth decimal ("pipettes"), but for learning, think in pips.
Rough pip math for EUR/USD: 1 pip on 1 standard lot ≈ $10. That single fact lets you translate any stop-loss distance into money.
The majors
The seven most-traded USD pairs — EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, NZD/USD — account for the bulk of global FX volume. All seven are available in the Fundezy simulator with historical data for backtesting.
Lots
FX position size is measured in lots:
| Size | Name | Units of base currency |
|---|---|---|
| 1.00 | Standard lot | 100,000 |
| 0.10 | Mini lot | 10,000 |
| 0.01 | Micro lot | 1,000 |
The Fundezy simulator uses real contract sizes. FX pairs are 100,000 units of base currency per 1.00 lot, so 1 pip on 1.00 lot of EUR/USD ≈ $10, 1 pip on 0.10 lot ≈ $1, and 1 pip on 0.01 lot ≈ $0.10. Gold (XAU/USD) is the exception: 100 troy ounces per 1.00 lot, so a $1 move in the gold price is worth about $100 per lot. Your account starts with a simulated 100,000 in balance.
Why forex for education?
FX is ideal for learning: deep liquidity, no fixed trading session limits (24 hours, 5 days a week), and free historical data. The mechanics you learn here — quotes, pips, lots, order types — transfer to every other market.
By the numbers
Spot FX — the direct exchange this course simulates — ran at about $2.1 trillion per day of the $7.5 trillion total in April 2022 (BIS Triennial Survey). The arithmetic of position size is universal: 1 pip on 1.00 standard lot (100,000 units) of EUR/USD is about $10, so 0.10 lot is $1 and 0.01 lot is $0.10 — exactly the contract sizes this platform uses.
Practice in the simulator
Check live quotes for all seven majors — apply what you just read with simulated money.
Check your understanding
4 questions · answer all, then submit.