How to calculate position size for gold (XAU/USD)
Position size is the one number in a trade you fully control. Get it wrong, and a normal losing streak turns into a serious drawdown. For gold, the calculation is simple once you work in price distance instead of pips.
The formula
Lot size = the amount you are willing to lose ÷ (stop distance × value of a 1.00 move per lot)
- Amount at risk: your balance times your risk per trade. With a 10,000 balance and 1% risk, that is 100.
- Stop distance: the distance between your entry and your stop loss, in the gold price. If you buy and put the stop 5.00 lower, the distance is 5.00.
- Value of a 1.00 move per lot: at most brokers one lot of XAU/USD is 100 ounces, so a 1.00 move in the price is worth 100 on a USD account.
A worked example
Balance 10,000 USD, 1% risk, stop 5.00 below the entry, 100 oz contract:
- Amount at risk: 10,000 × 1% = 100
- Loss per lot at the stop: 5.00 × 100 = 500
- Lot size: 100 ÷ 500 = 0.20 lots
A wider stop means a smaller position, and the risk stays the same:
| Stop distance | Loss per 1 lot | Lot size for a 100 risk |
|---|---|---|
| 2.50 | 250 | 0.40 |
| 5.00 | 500 | 0.20 |
| 10.00 | 1,000 | 0.10 |
| 20.00 | 2,000 | 0.05 |
The stop decides the size, not the other way round. Put the stop where the trade idea is wrong, then size the position to fit it.
What changes the result
- Contract size. 100 oz per lot is common, but not universal. Check the contract size in your platform’s symbol specification (in MetaTrader 5: right-click the symbol, then Specification).
- Lot step. Most brokers allow steps of 0.01 lot. Always round down, so you never risk more than you planned.
- Account currency. On a EUR or HUF account, convert the loss per lot into your account currency first, at the current exchange rate.
- Spread and slippage. Your real loss at the stop is usually a little larger than the distance on the chart, especially around news.
- Leverage is not risk. Leverage decides how much margin the position needs. Your risk is set by the lot size and the stop.
A quick check before every trade
- Where is the idea invalid? That is your stop.
- How much of the account are you willing to lose if it is? That is your risk.
- Divide, round down, and open the trade with the stop already attached.
The position size calculator takes the stop in pips. With a 0.10 pip and a 100 oz contract, a 5.00 stop is 50 pips, and one pip is worth 10 per lot. If you are not sure how your broker defines a pip, the pip value calculator works it out.