How to trade gold (XAU/USD): a step-by-step guide

What gold is and how a gold CFD works

Gold is a physical metal quoted in US dollars per ounce, and a CFD on gold (XAU/USD) is a contract that pays the difference between your entry price and your exit price, without you ever owning metal. One standard lot represents 100 ounces, so the contract's value moves $100 for every $1.00 move in the quoted price. You can go long if you expect the price to rise or short if you expect it to fall; the profit or loss is settled in your account currency.

A gold CFD tracks the underlying market price but is not the same as holding gold. There is no delivery, no storage, and no physical ownership. What you control is exposure, and what you pay for is the cost of carrying that exposure, which is covered later in this guide. Because the price is quoted in US dollars, a Philippine trader's peso result also depends on the USD/PHP rate at the time the position is closed.

Lots and contract size on XAU/USD

One standard lot of gold is 100 ounces, so the notional value of one lot at a price of about 4275.0 is roughly $427,500. A mini lot is 0.10 of that (10 ounces), and a micro lot is 0.01 (1 ounce). The pip on XAU/USD is 0.01, which means a one-pip move on one standard lot is $1.00; on a 0.10-lot position it is $0.10.

Contract size is the multiplier that turns a price move into money. If you buy 0.10 lots at 4275.0 and the price rises to 4280.0, that is a 500-pip move, and the gross gain is 500 x $0.10 = $50. The same move against you is a $50 loss. Get comfortable with this arithmetic before you trade, because every risk calculation in the rest of this guide is built on it.

Leverage and margin: what the cap means

Leverage lets you control a position larger than the cash in your account, and margin is the part of your balance that the broker sets aside to hold that position open. The maximum leverage available to a Philippine client is the cap that applies to the FxPro entity serving this country. Treat that cap as a ceiling, not a target: the higher the leverage you actually use, the smaller the price move needed to wipe out your margin.

Margin is not a cost and not a loss; it is capital reserved while the trade is open. At the applicable cap, a 0.10-lot gold position needs about $85.50 in margin. That figure is a useful anchor: it tells you how much of your balance is tied up by a modest position, and it shows why a leverage cap does not remove risk. Your free margin is what remains to absorb adverse moves, and it is the number that decides whether a position survives a normal pullback.

Sizing a position to a fixed risk

Size the trade from the stop, not from the margin. Decide the peso amount you are willing to lose on the trade, convert it to US dollars at the prevailing rate, then divide by the dollar value of your stop distance. If you will risk $30 and your stop is 300 pips away, each pip can be worth $0.10, which is a 0.10-lot position. If the stop is 600 pips away, the same $30 risk allows only 0.05 lots.

This is the core discipline of gold trading: the stop distance and the risk budget together determine the lot size, and the lot size is never chosen first. A common approach is to risk a small, fixed percentage of the account on each trade, so that a losing streak does not become an account-ending event. Write the calculation down before you click buy or sell; if the resulting lot size feels too small to be interesting, the honest answer is that the stop is too wide for your budget, not that the budget should be raised.

The real cost: spread and overnight swap

The cost of a gold CFD consists of the spread and, if you hold the position past the daily cut-off, the overnight swap. The spread is the difference between the bid and the ask, and it varies with market conditions, liquidity and the time of day, so it is quoted live on the platform rather than fixed in advance. The swap is a financing adjustment credited or debited once a day, and it depends on the direction of your position and the prevailing financing rates.

Neither cost is a single published number you can plan around forever, which is why you should check both on the platform before you trade. The spread is paid once when you open and again in effect when you close, while the swap accrues for as long as the position stays open. A trade held for minutes pays mostly spread; a trade held for weeks pays swap every day. Match your holding period to the cost structure rather than the other way around.

Placing a stop and managing the trade

Place the stop-loss order at the same time as the entry order, at a price that would prove your trade idea wrong rather than at a round number that feels comfortable. On XAU/USD the pip is 0.01, so a stop 300 pips away is $3.00 of price movement, and on a 0.10-lot position that is a $30 loss. The stop should be far enough from the entry to survive normal noise and close enough that the resulting loss fits your risk budget.

Once the position is open, manage it by the plan you wrote, not by the profit or loss on the screen. Moving a stop further away to avoid being stopped out turns a defined risk into an open-ended one, and it is the single most common way a small loss becomes a large one. If the trade moves in your favour, you can trail the stop or take partial profit, but decide the rule in advance. Close the platform when you have reached your planned outcome; gold trades around the clock, so there is always another opportunity.

Common beginner mistakes on gold

The most expensive beginner mistake on gold is treating the leverage cap as a target and opening a position whose stop would wipe out the account. A second is ignoring the contract size: 1 lot is 100 ounces, so a 0.10-lot position already moves $10 for every $1.00 in price, and a $20 move is $200. Traders who size by feel rather than by formula discover this after the fact.

Other recurring errors are holding a leveraged position through major news without a stop, letting the overnight swap quietly erode a slow trade, and moving the stop when the market approaches it. On this instrument, volatility around US data releases can be sharp, and a position that was comfortable in a quiet session can become uncomfortable in minutes. Finally, funding with GCash or bank transfer is convenient, but it does not change the risk; the money in the account is still real money, and the loss is still a loss.

A realistic first-trade walk-through

A realistic first trade starts with a written plan, not a prediction. Suppose you have funded the account and are looking at XAU/USD near 4275.0. You decide your idea is that gold will rise, your stop belongs 300 pips below the entry at 4272.0, and you are willing to risk $30. Dividing $30 by 300 pips gives $0.10 per pip, which is a 0.10-lot position; at the applicable cap that position needs about $85.50 in margin.

You place a buy order at the market, attach the stop at 4272.0, and note the spread and the swap rate on the platform before confirming. If the price rises, you follow your pre-set rule for taking profit or trailing the stop; if it falls to 4272.0, the stop closes the trade for a loss of about $30, which is the amount you planned to lose. You then review the trade, confirm the cost you actually paid, and only then consider the next one. That is the whole method: defined risk, known cost, and a plan that survives being wrong.

The first week on a demo account: a five-day test plan that builds one habit per day

Spend your first demo week testing one mechanical habit per day, not trying to make a profit. Day one: place a 0.10-lot XAU/USD order and write down the margin the platform shows, then compare it with the worked figure of about $85.50 at the applicable cap. Day two: place the same order with a stop 2.00 away (200 pips at 0.01 per pip) and watch the platform calculate your loss in pesos. You are checking that the numbers the platform displays match what you expect, because a mistake here is cheaper to find on demo than on a live account funded through GCash.

Use days three and four to test order types and platform differences. Day three: place a market order, a limit order, and a stop-entry order on XAU/USD, and note which one fills at the price you intended and which slips. Day four: repeat the same three orders on a second platform from the broker (MT4, MT5, cTrader, or the FxPro app) and record where the execution differs. Gold moves fast around news, so you want to know how each platform handles a market order before you have money at stake. Write the fill prices side by side; that comparison is the output of the day, not a profit figure.

Close the week by testing how you react to a losing trade and how funding works in practice. Day five: take three demo trades with a fixed stop, let each one hit either the stop or a target you wrote down before entry, and log your emotion and whether you moved the stop. Then simulate a withdrawal and a deposit in the demo interface so the GCash and bank transfer steps are familiar before real money moves. The test is whether you can follow your own written rule for five days without improvising. If you cannot, the demo week has done its job by showing you that before a live account does.

What to write in a gold trade journal: eight fields that turn a pile of trades into evidence

Record eight fields for every XAU/USD trade: date and time, direction, entry price, stop price, lot size, exit price, the reason you entered, and what you felt when you closed. Those eight fields are enough to reconstruct the trade later and to see whether your losses cluster around a particular time of day, a particular reason, or a particular emotion. Without the reason and the feeling, a journal is just a list of prices and you cannot tell a good process from a lucky outcome. Write the entry before you place the order, not after, so the reason is not rewritten by the result.

Convert the eight fields into pesos and pips the same day, while the platform history is still open. For gold, one pip is 0.01 and one standard lot is 100 oz, so a 2.00 move on 0.10 lots is 200 pips and the peso value depends on the USD/PHP rate at the time; write the actual peso amount the platform shows rather than a mental estimate. Add the spread you paid and any overnight swap if the trade was held past the daily rollover. Those costs are part of the trade and belong in the journal, because a trade that looks flat on price can still be a loss after costs.

Review the journal once a week and write one sentence that names the single most expensive repeated behaviour. The review is the point of the journal: you are looking for patterns such as entering before a scheduled news release, widening a stop after entry, or sizing up after a loss. Write the sentence as a rule you can follow next week, for example no new gold position within thirty minutes of a major US data release. Keep the journal in a spreadsheet or a notes app you actually open; a journal you do not review is a diary, not a tool. The rule you write down is the output, and the next week's journal tests whether you followed it.

Position sizing as a habit: the two-minute pre-trade check that replaces the calculator

Make position sizing a fixed two-minute check before every order, so the calculation happens once and the habit carries it afterwards. The check has three steps: decide the peso amount you are willing to lose on the trade, divide it by the distance between entry and stop in pips, and confirm the resulting lot size is one you have traded before. For XAU/USD, a stop 2.00 away is 200 pips, so a ₱5,000 risk on 0.10 lots means each pip is worth about ₱25; if the number feels uncomfortable, the stop is too wide or the lot is too big. The arithmetic is simple; the habit is refusing to skip it.

Anchor the habit to the margin figure the platform shows, not to a leverage number you are trying to use. At the applicable cap, a 0.10-lot gold position needs about $85.50 margin, and that figure is a cap on what you can hold, not a target for what you should hold. The habit is to ask whether the margin plus the stop-loss risk together leave enough free margin to survive a normal gold swing without a margin call. If the answer is no, reduce the lot size before entry rather than after the platform warns you. The cap is a ceiling set by the entity serving the Philippines, and your sizing should sit well below it.

Rehearse the habit on the demo account until the two-minute check is automatic, then keep a written card next to your screen for the first live month. The card lists the three steps and the maximum lot size you allow yourself, and you tick it before each order. The habit fails when you size by feel after a win or a loss, so the card removes the decision at the moment you are least objective. Review the card against your journal weekly: if the journal shows trades that skipped the check, the card is not working and needs a stricter rule. Sizing is a habit because the market will not give you time to calculate calmly once the price is moving.

The three most expensive beginner mistakes on gold and the one rule that prevents each

The most expensive beginner mistake on gold is trading a lot size that a normal stop cannot survive, and the rule that prevents it is a hard maximum lot size written down before the session starts. Gold can move several dollars in minutes, so a position that feels small in margin terms can produce a loss far larger than the peso amount you intended to risk. The rule is simple: no order above the maximum lot size on your card, no exceptions, even after a winning streak. At the applicable cap, a 0.10-lot position needs about $85.50 margin, which tells you the position is real money; treat the maximum as a limit you cannot override mid-trade.

The second expensive mistake is moving or removing a stop once the trade is live, and the rule that prevents it is to place the stop at entry and treat any change as a new trade that must pass the full pre-trade check. A stop that is widened to avoid a loss turns a defined risk into an undefined one, and on gold a single widened stop can erase many small wins. The rule is to write the stop price in the journal before entry and to close the trade instead of moving the stop if you no longer believe in the original level. If you want to re-enter, you start the check again from the beginning.

The third expensive mistake is trading through scheduled news without a plan for the wider spread and faster fills, and the rule that prevents it is a news blackout window around major US data releases. Spreads on XAU/USD can widen sharply around releases, and a stop placed close to the price can be filled well beyond its level. The rule is no new gold position within the window you set, and no holding a position through the release unless the trade was planned for it with a wider stop and a smaller lot. Write the window on the same card as your maximum lot size, so both rules are checked in the same two minutes before every order.

From demo to live on gold: the three checkpoints that tell you the habits are ready

Move from demo to live only when three checkpoints are met: twenty logged trades that followed the written rules, a journal review that names one repeated mistake and a rule that fixed it, and a week of the two-minute sizing check with no skipped orders. The checkpoints are about process, not profit, because a profitable demo week can come from luck while a rule-following week cannot. Use the demo to prove you can size, place a stop, and log the trade without improvising. If any checkpoint fails, extend the demo period rather than funding a live account through GCash or bank transfer and hoping the habit appears under pressure.

The first live month should use the smallest lot size you can trade and the same written card from the demo, with the maximum lot size unchanged. The purpose of the first month is to confirm that the habits survive real money, not to make a return; the peso amounts will be small, and that is correct. Keep funding simple through the familiar rails, and keep the account balance at a level where a normal losing streak does not force a deposit decision in the middle of a trade. If you find yourself checking the balance every few minutes, the lot size is still too large for the account and should be reduced before the next trade.

Review the first live month against the demo journal and look for the same three mistakes: oversized lots, moved stops, and trades through news. If the live journal shows any of them, return to the demo for a week and re-run the checkpoint that failed. The regulator caveat matters here: FxPro is licensed by the FCA (UK) and CySEC, not by the SEC of the Philippines, so the protections you rely on are the ones the serving entity provides and your own written rules. The checkpoints are how you make sure the rules, not the platform or the market, are deciding when you trade.