Volume, Lot, Leverage, Pip, Pipette

Hi all,

I am spending much time on Forex demo accounts and many websites for almost a month but I still cant get the basics. I read different sentences to define these terms, volume lot, leverage, pip, pipette.

I am using the platform MT4 and it asks for volume, I guess it is same as lot, but not sure.

Let’s say I am trading with an account of 100$ balance and 100:1 leverage. I want to trade EUR/USD, which has 5 decimals (as I know it means the broker uses pipettes). Questions are below according to this.


1- People say traders should risk no more than 2% of their account for a trade. How can I determine the money I risk in MT4? For example, I write 0.1 to the volume (again, not sure if it is same with lot), how much do I risk with?

2- What would be different than this situation if there were 4 decimals, which means the broker doesn’t use pipettes?

3- If I am reading a strategy which has example numbers with 4 decimals, how can I convert it to 5 decimals? Briefly, he is using pips and I am using pipettes. Do I just simply divide it by 10?

Thanks for your answers.

Habe you been through the school if pipsology (top left tab)? If not do so because it explains this on there. It also has a link to the position size calculator which you will find useful (i think its in the tools tab as well).