Forex has its own small vocabulary of measurement units. They sound technical but each one answers a simple, practical question.

Pip: how much did the price move?

A "pip" (percentage in point) is the standard unit for measuring a price change in most currency pairs — typically the fourth decimal place (0.0001). If EUR/USD moves from 1.1000 to 1.1015, that's a 15-pip move. Pairs involving the Japanese yen are a common exception, quoted to two decimal places instead of four, so a pip there is 0.01.

Pips exist so traders can talk about price movement in a consistent unit regardless of the pair's absolute price level — "the pair moved 20 pips" means the same kind of thing whether you're looking at EUR/USD or GBP/JPY.

Spread: the cost of trading

The spread is the difference between the price a broker will buy a currency from you (the bid) and the price they'll sell it to you (the ask). It's effectively the built-in transaction cost of the trade, and it widens or narrows based on how liquid a pair is and how volatile conditions are at the time. Major pairs during active trading hours typically have the tightest spreads; exotic pairs or quiet, illiquid hours tend to have wider ones.

Lot size: how much are you actually trading?

A "lot" is a standardized trade size. A standard lot is 100,000 units of the base currency, a mini lot is 10,000, and a micro lot is 1,000. Lot size is what turns a pip movement into an actual amount of money — the same 15-pip move is worth a very different amount depending on whether it happened on a micro lot or a standard lot. This is also where position sizing and risk management (covered separately) become directly relevant: lot size is the dial that controls how much a given price move affects you.