What happens when you press Buy
What you learn in 3 minutesA trade looks like one action on a chart, but it is really four steps: the order leaves your platform, it gets filled at a price, it becomes an open position, and it ends when you close it. Each step is where a specific cost attaches, so knowing the steps tells you what you are paying for. We use EUR/USD around 1.0850 and a standard lot to show the money in pesos.
One pip on one standard lot
| Step | Amount | Note |
|---|---|---|
| Instrument | EUR/USD | the pair being traded |
| Price at entry | 1.0850 | the quoted rate when the order is filled |
| Standard lot size | 100,000 units | the base currency amount in one standard lot |
| Pip size | 0.0001 | one pip is the fourth decimal place for EUR/USD |
| Pip value in quote currency | 10 units | 100,000 x 0.0001 = 10 units of the quote currency |
| Pip value in pesos | ₱10 | 10 units converted at the current rate; this varies with the exchange rate |
The broker may round the pip value, charge a spread on entry and exit, and add commission or swap. These charges vary between brokers.
The mistake people make here
Many beginners treat the Buy button as the whole trade and forget that the position stays open until they close it. They watch the chart move but do not check the spread, commission or swap that attach to the entry, the open position and the exit. The fix is to write down the four steps before pressing Buy, and to check what the broker charges at each step. If a cost is not clear, ask the broker or check the fee schedule.Check yourself
If one pip on one standard lot of EUR/USD is 10 units of the quote currency, what is the pip value in pesos when the conversion rate is ₱58 to 1 unit?
10 units x ₱58 = ₱580 per pip.
You open a position at 1.0850 and close it at 1.0860. How many pips did the price move?
1.0860 - 1.0850 = 0.0010, which is 10 pips.
Using the pip value from the first question, what is the gross result of that 10-pip move on one standard lot?
10 pips x ₱580 = ₱5,800 before any spread, commission or swap.