How to Trade Gold (XAU/USD) CFDs

What is gold and how does a gold CFD work?

Gold is traded as a CFD on the spot price of XAU/USD, meaning you speculate on price movements without owning physical bullion. A CFD lets you go long or short with leverage, profiting from both rising and falling markets.

With FxPro, you trade gold on MT4, MT5, cTrader or the FxPro app. The price is quoted in US dollars per troy ounce, so your profit or loss is realised in USD and converted to AUD by your broker when you withdraw.

Lots and contract size for gold

One standard lot of gold (XAU/USD) equals 100 troy ounces. A movement of 0.01 in the price is one pip, worth US$1 per standard lot. If gold moves from 4275.0 to 4275.5, that is a 50-pip move, or US$50 on one lot.

You can trade smaller sizes: 0.10 lots is 10 ounces, where a 0.01 move is worth US$0.10. This flexibility is essential for risk management, especially when starting with a modest account.

Leverage and margin on gold

Leverage lets you control a larger position with less capital. At 1:500 leverage, a 0.10-lot gold position requires about A$85.50 margin, based on a reference price of 4275.0. That is the amount locked by your broker while the trade is open.

Leverage magnifies both gains and losses. A 1% adverse move on 0.10 lots would lose roughly US$42.75, which is about half the margin. Always treat leverage as a tool to reduce margin, not to increase risk.

Sizing a gold trade to a fixed risk

The core discipline is risking a fixed percentage of your account per trade, typically 1–2%. First decide your stop-loss distance in pips, then calculate the position size so that if the stop is hit, you lose only that fixed amount.

For example, if your account is A$10,000 and you risk 1% (A$100), and your stop is 50 pips away, then each pip must be worth A$2. In USD terms, that is about 0.20 lots (since 1 pip on 1 lot is US$1). Adjust for the AUD/USD rate.

The real cost of trading gold: spread and swap

The spread is the difference between the buy and sell price. FxPro offers competitive spreads on gold, but they widen during volatile news. The spread is a cost you pay on entry, so a 30-pip spread on a 50-pip target is significant.

If you hold a gold position overnight, you pay or receive a swap (financing) rate. Swaps are charged daily and can add up on long-term trades. Check FxPro’s current swap rates for gold before holding over the rollover time.

Placing a stop and managing the trade

Always place a stop-loss order when you enter a gold trade. A stop is a pre-set price that closes your position automatically to limit losses. For gold, common stop distances range from 20 to 100 pips depending on volatility.

Manage the trade by moving your stop to breakeven once the price moves in your favour by about the initial risk. Avoid widening stops; if the market hits your stop, accept the loss and look for the next setup. Never add to a losing position.

Common beginner mistakes on gold

The most frequent mistake is overleveraging: using maximum leverage to trade a size that wipes out the account on a small move. Gold can move 100 pips in minutes during news, so a 0.10-lot position with 1:500 leverage can lose the entire margin quickly.

Other mistakes include trading without a stop-loss, averaging down on losing trades, ignoring the spread cost, and holding overnight without checking swap rates. Beginners also overtrade, trying to catch every move instead of waiting for high-probability setups.

A realistic first gold trade walk-through

Suppose you have A$5,000 and decide to risk 1% (A$50) on your first gold trade. You see a breakout at 4275.0 and place a buy stop at 4276.0 with a stop-loss at 4271.0 (50 pips risk). Your target is 4286.0 (100 pips).

Using the formula, with a 50-pip stop and A$50 risk, each pip must be worth A$1. That is about 0.07 lots. You place the order on MT4 with a stop and target, then let it play out. If stopped, you lose A$50; if target hit, you gain A$100. This is a controlled trade.