Why gold needs its own risk plan
One lot of XAUUSD is 100 ounces, so every $1 move is worth $100 per lot. Gold also moves further in a day than most currency pairs. A risk plan built for EURUSD will often be too aggressive for gold.
1. Risk a fixed share of your account
Decide in advance how much of your account one trade may lose. Many traders use between 0.5% and 1%. Fixed-percentage risk means your trades shrink automatically after losses and grow after wins.
| Account | 0.5% risk | 1% risk | 2% risk |
|---|---|---|---|
| $5,000 | $25 | $50 | $100 |
| $10,000 | $50 | $100 | $200 |
| $25,000 | $125 | $250 | $500 |
2. Place the stop first, then size the trade
Put your stop where the trade idea is proven wrong on the chart, for example beyond a swing high or low. Then work out the lot size that makes that stop cost your chosen risk.
Gold lot size = Money at risk ÷ (Stop distance in $ × 100)
With $100 of risk and a $5 stop: 100 ÷ (5 × 100) = 0.20 lots. With the same risk and a $10 stop: 0.10 lots. The XAUUSD lot size calculator does this for you.
3. Let volatility set the stop distance
The Average True Range (ATR) indicator shows how far gold usually moves per candle. A stop of 1 to 1.5 times the ATR of your trading timeframe keeps you out of normal noise. If the 15-minute ATR is $4, a stop of $4 to $6 is reasonable, and you size down to match.
4. Set a daily loss limit
Stop trading for the day after a set loss, for example 2% of the account or two losing trades in a row. Most large losses come from trying to win back a bad morning. Prop firms enforce a daily limit, often 5%, and breaking it ends the account, so set your own limit well inside theirs.
5. Count correlated trades as one
Gold and silver often move together, and gold frequently moves against the US dollar. A long gold trade plus a long silver trade is close to one bigger gold trade. So is long gold plus short USDCHF or long EURUSD on many days. Add up the risk of trades that move together and keep the total within your limit.
6. Watch your margin
At low leverage, margin can become the limit before risk does. At 1:10, one lot of gold near 4,286 needs about $42,862 of margin. On funded accounts with a margin rule, use the prop firm lot size calculator, which checks both at once.
7. Respect the maths of drawdowns
Losses are harder to recover than they look, because each gain is measured from a smaller balance.
| Drawdown | Gain needed to get back |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 30% | 42.9% |
| 50% | 100% |
8. Know your break-even win rate
Your reward-to-risk ratio decides how often you need to win just to break even, before costs.
Break-even win rate = 1 ÷ (1 + Reward-to-risk)
| Reward-to-risk | Break-even win rate |
|---|---|
| 1:1 | 50% |
| 1:1.5 | 40% |
| 1:2 | 33.3% |
| 1:3 | 25% |
Use the profit calculator to check the money at your stop and at your target before you enter.
A one-page gold risk plan
- Risk per trade: 1% or less.
- Stop: from the chart, at least 1 × ATR of my timeframe.
- Lot size: from a calculator, rounded down.
- Daily limit: stop after −2% or two losses.
- Correlated trades: combined risk counts against my limit.
- No new trades in the minutes before major US data.