Gold on a funded account: what it costs you before it moves

Gold is the most traded instrument on most prop accounts after the major currency pairs, and it is the one where position sizing goes wrong most often. Not because it is volatile, though it is, but because the contract size and the margin pull in opposite directions.

Here is what gold actually costs on an account here, in the order it costs it.

The contract: $100 of exposure per point, per lot

Gold here is USD 100 per lot, quoted to 0.01.

That means a one lot position gains or loses $100 for every $1 move in the gold price. Gold moving $10 in a session is ordinary. So one lot is ordinary $1,000 of profit or loss.

Now put that against the daily loss limit.

On a $5,000 account, the daily limit is $250 on Two-Step and $150 on One-Step, Instant Lite and Instant Pro.

A $10 move against one lot is four to six times the whole daily limit. The account is gone long before the move finishes.

So on a $5K account, gold is a fractional-lot instrument. Not by preference: by arithmetic.

The margin will happily let you do it anyway

Gold's margin here is 1%, which is 100:1 leverage.

On a $5,000 account, 1% margin means you can open roughly $500,000 of gold exposure. That is five lots. Five lots is $500 per $1 move, which is two to three times your entire daily loss limit on a single dollar of price movement.

This is the trap, and it is worth being blunt about it: the platform will let you open a position that can fail your account in under a minute. Margin tells you what is permitted. The daily loss limit tells you what is survivable. They are not the same number and on gold they are very far apart.

Every other rule on this site is published so you can plan around it. This one is published so you can plan around it too.

Sizing it from the limit instead

The arithmetic is short enough to do in your head.

Decide how much of the daily limit one trade may use. A quarter is a reasonable starting point, because it lets you be wrong four times.

On a $5,000 One-Step account: daily limit $150, a quarter is $37.50.

If your stop is $3 away in gold terms, then at $100 per point per lot, $37.50 of risk is 0.125 lots.

That is a small number and it is meant to be. It is also the number that lets you trade gold for a week instead of for an afternoon.

Scale it with the account: the same calculation on a $100K Two-Step account gives a $5,000 daily limit, a $1,250 quarter and 4.16 lots on the same $3 stop.

The hour gold is closed, and the cost of holding it

Gold trades 00:00-20:59 and 22:01-24:00. There is an hour each day when it is not tradable at all.

That hour matters for one reason: a position held through it cannot be closed, and the daily loss limit here is measured on equity, which includes open positions. The market reopens where it reopens.

Holding also costs. Swap on gold is -64.668 long and +34.562 short. Long positions pay to be held, short positions are paid. It is not large against a $10 move, but it is a real daily cost against your equity, and equity is what the limits watch.

Three things to take from this

1. $100 per point, per lot. Every sizing decision starts here.
2. Margin permits far more than the daily limit survives. 1% margin and a 3% daily loss limit are not compatible numbers at full size.
3. Size from the limit, not from the margin. A quarter of the daily limit per trade is a sane default.

Gold is entirely tradable on these accounts. It just needs to be sized from the rule that fails you, rather than the rule that lets you in.

The rules referred to here

• Daily loss: 5% Two-Step, 3% One-Step, Instant Lite and Instant Pro
• Measured on equity, so open positions count
• Gold contract: USD 100 per lot, 1% margin, hours 00:00-20:59 and 22:01-24:00

Full rules per plan are on the challenges page, and gold's specification sits with the other 98 instruments at tradable symbols.