Position sizing
Gold lot sizes and pip value: what 0.01 lots really means
Position size is the setting that decides how a trade feels. Get it wrong and a perfectly sensible system becomes unbearable to hold. On gold, the word you need is lot.
A lot is 100 ounces
On a standard XAUUSD contract, one lot is 100 troy ounces of gold. This is the convention the market inherited from the futures exchanges, and nearly every retail broker follows it.
With gold around $4,300 an ounce, one lot is roughly $430,000 of exposure. You are not putting up $430,000, because of leverage, but that is the amount of gold your profit and loss is calculated on.
Brokers let you trade fractions:
| Name | Size | Ounces | Exposure at $4,300 |
|---|---|---|---|
| Standard lot | 1.00 | 100 | ~$430,000 |
| Mini lot | 0.10 | 10 | ~$43,000 |
| Micro lot | 0.01 | 1 | ~$4,300 |
0.01 lots is one ounce of gold. That is the smallest trade most brokers accept, and it turns out to matter more than almost any other number on a small account.
What a point is worth
Gold is quoted to two decimal places: 4,344.20, then 4,344.21. That last digit is a point.
The arithmetic is refreshingly simple, because the contract is priced in dollars per ounce:
Value of one point = lot size × 100 ounces × $0.01
So for 0.01 lots: 0.01 × 100 × $0.01 = $0.01 per point. One cent.
| Lot size | Ounces | Per point | Per $1 move in gold |
|---|---|---|---|
| 0.01 | 1 | $0.01 | $1 |
| 0.10 | 10 | $0.10 | $10 |
| 1.00 | 100 | $1.00 | $100 |
The right-hand column is the one to memorise. At 0.01 lots, every $1 gold moves is $1 to you. At one full lot, it is $100.
A word on "pips"
People use pip and point interchangeably on gold, and they should not. In currencies a pip is a defined thing, the fourth decimal place. On gold there is no agreed definition: some platforms call $0.01 a pip, others call $0.10 a pip, and some mean $1.
Do not trust the word. Work in dollars per ounce instead, and you will never be caught out by a broker using a different convention from the one in your head.
Working out a real trade
Say you want to risk $50 on a trade, with a stop 30 ounces-worth of dollars away, meaning $30 of gold movement.
Lot size = risk in dollars ÷ (stop distance in dollars × 100)
$50 ÷ ($30 × 100) = 0.0167 lots.
Your broker will not accept 0.0167. It accepts steps of 0.01, so you round down to 0.01 lots, and your actual risk is $30 rather than $50.
That rounding is not a rounding error. It is the single most important fact about trading gold on a small account, and it deserves its own section.
The 0.01 floor, and what it does to a small account
You cannot trade less than 0.01 lots. There is no 0.005. This gives every small account the same awkward shape.
At 0.01 lots, a $30 stop risks $30. If your account is:
- $10,000, that is 0.3% of your balance. Comfortable.
- $2,000, that is 1.5%. Reasonable.
- $1,000, that is 3%. Getting heavy.
- $500, that is 6% on a single trade. Too much.
Notice what happened. The trade did not change. The account did. On a small balance, the smallest trade the broker will accept is already a big bet, and you have no way to make it smaller.
This is why Goldsmith sets a $1,000 minimum, with around $2,000 working best. It is not an arbitrary gate. Below that, the broker's floor stops the system sizing trades the way it wants to, and the account behaves differently from the plan.
What the floor did to the recorded figures
You can see the effect in the recorded record. Every row below replays the same 3,172 trades, with every trade rounded down to the nearest 0.01 lots, the way a real account works:
| Deposit | Balance at 23 Sep 2026 | Return | Deepest fall |
|---|---|---|---|
| $1,000 | $5,528 | +453% | −14.2% |
| $2,000 | $12,363 | +518% | −14.1% |
| $5,000 | $37,707 | +654% | −16.3% |
| $10,000 | $76,977 | +670% | −16.5% |
How Goldsmith would have performed on Vantage's recorded prices, 1 Nov 2025 – 23 Sep 2026. Not a live account. Past performance does not guarantee future results, and you can lose some or all of your deposit.
The returns are not identical, and the reason is the floor. A real account rounds each trade down, so most trades come out slightly smaller than intended. Across 3,172 trades that adds up, and the smaller the account, the bigger the gap. The same effect also makes the deepest fall slightly shallower on the smaller accounts, because they were carrying less risk per trade than planned.
That is the honest trade-off of starting small: a little less risk on the way down, and a little less return on the way up. The full table is on the results page.
Margin is not risk
One more distinction that trips people up.
Margin is the deposit the broker holds to let you open the position. At 500:1 leverage, 0.01 lots of gold at $4,300 needs about $8.60 of margin. That is not your risk. It is a deposit, and you get it back when you close.
Risk is how far the price can go against you before you get out, multiplied by what each point costs. With a $30 stop on 0.01 lots, your risk is $30, even though the margin was $8.60.
Confusing the two is how people end up with twenty positions open, each with "only $8.60 tied up", and a total risk far larger than the account. The broker is perfectly happy to let you do this.
Free margin, and the margin call
Your equity is your balance plus or minus whatever your open trades are currently showing. Free margin is equity minus the margin being held.
If free margin runs down far enough, the broker issues a margin call, and below a further threshold it starts closing your positions for you, worst first. This is called a stop out, and it happens automatically whether or not you are watching.
The way to never meet one is not to watch the screen more closely. It is to size positions so that a bad run cannot get you there.
The short version
- One lot of gold is 100 ounces. 0.01 lots is one ounce.
- At 0.01 lots, every $1 gold moves is $1 to you.
- Ignore the word "pip" on gold and work in dollars per ounce.
- Lot size = risk ÷ (stop distance × 100), rounded down to 0.01.
- The 0.01 floor is why small accounts behave differently, and why the minimum here is $1,000.
- Margin is a deposit. Risk is what you can lose. They are not the same number.
If the falling-balance side of this is new to you, read what a drawdown is next.