Risk Management for Gold Traders
Gold can move $20 or more in a single hour. The traders who last are not the ones with the best entries, but the ones who control how much they can lose.
Know what a move costs you
With most brokers, 1 standard lot of XAUUSD = 100 troy ounces. That means:
| Lot size | Ounces | Profit/loss per $1 move |
|---|---|---|
| 1.00 | 100 oz | $100 |
| 0.10 | 10 oz | $10 |
| 0.01 | 1 oz | $1 |
The 1% rule
Many traders risk no more than 1% (some up to 2%) of their account on any single trade. If you lose several trades in a row, which happens to everyone, the account survives.
Sizing a trade from the stop loss
Formula: lot size = (account × risk %) ÷ (stop distance in $ × 100)
Example: account $2,000, risk 1% = $20. The stop is $6 away. $20 ÷ ($6 × 100) = 0.033 lots, so round down to 0.03 lots. If the stop is hit, you lose about $18, not your whole week.
Leverage cuts both ways
Leverage lets you control a large position with a small deposit. It makes wins bigger and losses bigger by exactly the same amount. High leverage doesn't change how much you should risk, it only changes how much you can lose by mistake.
Simple rules that help
- Always place a stop loss when you open the trade, not later.
- Set a daily loss limit (for example 3%) and stop trading for the day when you hit it.
- Don't add to a losing trade to "average down".
- Be extra careful around major news. Stops can slip in fast markets.
- Keep a trading journal. Your own results are the best teacher.