Gold is the most traded instrument among retail algo traders — and the one where beginners most often misjudge risk. The reason is simple: brokers quote it with 2 decimals, people still talk about "pips", and nobody agrees on what a pip on gold is.
- On most brokers 1 lot of XAUUSD is 100 oz, so $1 of price movement equals $100 per lot.
- One pip on gold is commonly $0.10 of price — $10 per lot, $1 per 0.10 lot, $0.10 per 0.01 lot.
- Always translate any “pip” target into a dollar price distance before sizing.
- Lot size = Risk $ ÷ (Stop distance $ × 100), rounded down.
- ATR-based stops keep risk consistent across calm and volatile weeks.
- Check contract size, leverage and spread in the symbol specification.
Contract size: the number that matters
On the majority of MT4/MT5 brokers, 1 lot of XAUUSD = 100 troy ounces. Everything follows from that: when gold moves by $1.00, a 1-lot position gains or loses $100. Check the contract size in MetaTrader under Symbol → Specification — some brokers use 10 oz or 1 oz contracts, and then all numbers below shrink by 10 or 100.
Example: (2662.40 − 2650.00) × 100 × 0.20 = $248
Point vs pip on gold
With a 2-decimal quote (2650.00), the smallest step is $0.01 — one point. Most traders and most calculators define 1 pip = $0.10 (10 points). Some signal providers call $1.00 "a pip" or even "10 pips". Always translate any "pip" target into a dollar price distance before you size the trade.
| Price move | Points | Pips (common) | P/L 1.00 lot | P/L 0.10 lot | P/L 0.01 lot |
|---|---|---|---|---|---|
| $0.10 | 10 | 1 | $10 | $1 | $0.10 |
| $1.00 | 100 | 10 | $100 | $10 | $1 |
| $5.00 | 500 | 50 | $500 | $50 | $5 |
| $10.00 | 1,000 | 100 | $1,000 | $100 | $10 |
| $30.00 | 3,000 | 300 | $3,000 | $300 | $30 |
Gold's average daily range is often $25–40 and can exceed $60 on news days. A position that looks small in lots can move the account by several percent in an hour.
How to size a gold trade
Use the same logic as forex: decide the dollar risk, measure the stop distance in dollars of price, multiply by the contract size.
$10,000 × 1% = $100 risk · stop $8.00 → 100 ÷ 800 = 0.125 → 0.12 lots
Notice the rounding: brokers accept 0.01 steps, and you should round down. Spread also counts — a typical $0.20–0.40 spread on gold is 2–4 "pips" you pay on entry.
Margin on gold
Margin is the deposit the broker locks while the trade is open. It does not change your risk, but it limits how many positions you can hold.
2650 × 100 × 0.10 ÷ 100 = $265 (at 1:100)
Many brokers apply lower leverage to metals than to currencies (for example 1:20 under EU rules), so check the instrument specification instead of your account leverage.
⚙Gold lot size, margin and P/L in one placeFree WONNFX calculators with live XAUUSD price→Setting stops on gold with ATR
Because gold's volatility changes a lot from week to week, a fixed stop of "$5" can be too tight on a news day and needlessly wide in a quiet Asian session. Many traders size the stop from the Average True Range (ATR) of their timeframe and let the lot size adjust.
ATR(14) on M15 = $3.20 · × 1.5 → stop $4.80
$5,000 × 1% = $50 ÷ (4.80 × 100) = 0.104 → 0.10 lots
When ATR doubles, the stop doubles and the lot halves, so the money at risk stays the same. This is the simplest way to keep gold trades consistent across calm and volatile weeks.
Worked example: from setup to order
Suppose your plan is a Buy Stop above a level at 2651.50, stop-loss under the level at 2645.20, target 2664.10. Account $10,000, risk 0.75%.
| Step | Calculation | Result |
|---|---|---|
| Risk in money | $10,000 × 0.75% | $75 |
| Stop distance | 2651.50 − 2645.20 | $6.30 |
| Loss per 1 lot | 6.30 × 100 | $630 |
| Lot size | 75 ÷ 630 = 0.119 | 0.11 lots |
| Target distance | 2664.10 − 2651.50 | $12.60 |
| Reward : Risk | 12.60 ÷ 6.30 | 2.0 R |
| Profit at target | 12.60 × 100 × 0.11 | $138.60 |
Add the spread: at $0.30, the real risk is (6.30 + 0.30) × 100 × 0.11 ≈ $72.60 — still inside the plan because of rounding down. If the spread were $1.50 during news, the same trade would risk about $86, which is why gold entries close to releases need extra care.
Gold vs silver and other metals
Silver (XAGUSD) is usually quoted with 3 decimals and a standard contract of 5,000 ounces, so a $0.01 move equals $50 per lot. Platinum and palladium specifications vary even more between brokers. Never reuse gold lot sizes for another metal — the same "0.10 lots" can mean a completely different risk.
On a $200–500 account, the minimum 0.01 lot on gold already risks $1 per $1 of price. A $10 stop is $10 — up to 5% of the account. Consider a cent account or wider position spacing before trading gold with small capital.
Swaps and holding gold overnight
Gold positions carry swap — usually negative for longs and sometimes for both directions. Wednesday night is typically charged triple for the weekend. For intraday systems this hardly matters; for swing trades held for weeks it can eat a noticeable part of the profit.
Practical tips for gold traders
- Size every trade from the stop distance — never trade "a fixed 0.10" on gold.
- Avoid market orders in the first seconds after US data: spreads on XAUUSD can widen 5–10×.
- Use a daily loss limit; a single impulsive day on gold can erase a month.
- Compare contract sizes before copying signals from another broker.
Gold position sizing checklist
- Confirm the contract size in the symbol specification (100, 10 or 1 oz).
- Measure the stop in dollars of price, not in "pips" from a signal.
- Multiply by contract size to get the loss per lot.
- Divide your risk in money by that number and round down.
- Add spread and check the margin before you send the order.
Frequently asked questions
Educational content only, not financial advice. Leveraged trading carries a high risk of loss. Past performance does not guarantee future results. Broker and prop-firm rules change — always check the current conditions of your provider.
