Pips (short for "percentage in point") are a unit of measurement used to express the change in value between two currencies in forex trading. However, when trading Stock CFDs, the concept of pips is somewhat different since stocks are generally quoted in whole numbers. Instead, traders often refer to price movements in terms of points, which represent the change in the stock’s price. For example, if a stock moves from $100 to $101, that’s a one-point movement. 

The significance of understanding points is that they help traders gauge the potential profits or losses from a trade. When a trader opens a position, they need to determine how many points they are willing to risk based on their trading strategy. For instance, if a trader buys a Stock CFD at $100 and sets a stop-loss at $98, they are risking two points on that trade. 

Lot sizes refer to the quantity of shares that a trader is buying or selling in a single trade. When trading Stock CFDs, lot sizes can vary depending on the broker and the specific stock being traded. Brokers may offer different types of lot sizes, such as: 

1. Standard Lot: This typically represents 100 shares of a stock. 

2. Mini Lot: Often representing 10 shares, mini lots allow traders to take smaller positions. 

3. Micro Lot: Representing just 1 share, micro lots are ideal for traders who want to trade with very small amounts of capital. 

Choosing the right lot size is crucial for risk management. A larger lot size means a greater exposure to price movements, increasing both potential profits and potential losses. Conversely, a smaller lot size can help mitigate risk but may also limit profit potential. 

Traders should calculate their position sizes based on their risk tolerance, trading strategy, and the specific stock’s price movement. For instance, if a trader is willing to risk 2% of their capital on a single trade, they need to determine how many shares (lot size) to trade based on the distance between their entry price and stop-loss level.