How to size a gold trade by risk, not by leverage
The maximum position leverage allows and the position that fits your risk are very different numbers. This guide shows how to start from the loss you accept and work backwards to a lot size.
Last updated 2026-10-05 · Educational content, not investment advice
Start from the loss, not from the lot
Most beginners pick a lot size and then discover how much they can lose. Position sizing by risk reverses that: decide the amount you accept to lose if your stop loss is hit, then size the trade to match.
Lot size = (balance × risk %) ÷ (stop distance in USD per ounce × contract size)
All numbers are hypothetical examples to explain the formula. They are not market data and not a trading recommendation.
Worked examples (contract size 100 oz)
- Balance 1,000 USD, risk 1% (10 USD), stop 5 USD per ounce: 10 ÷ (5 × 100) = 0.02 lot.
- Same account, stop widened to 10 USD: 10 ÷ (10 × 100) = 0.01 lot. A wider stop means a smaller position for the same risk.
- Balance 5,000 USD, risk 1% (50 USD), stop 8 USD: 50 ÷ (8 × 100) = 0.0625, rounded down to 0.06 lot, which risks 48 USD.
Notice that rounding down keeps the risk at or below your limit. Check the minimum lot and the lot step of your own account, because they can force a larger position than the formula gives.
What 1% versus 5% risk does over a losing run
Take five losing trades in a row, which any trader should expect to meet at some point.
- At 1% risk per trade the account falls about 4.9% and needs about a 5.2% gain to recover.
- At 5% risk per trade the account falls about 22.6% and needs about a 29.2% gain to recover.
The loss compounds on a shrinking balance and the recovery gets disproportionately harder. See the drawdown recovery calculator for the full table, and the risk simulator to see how often long losing streaks appear for a given win rate.
What the formula does not protect you from
- Slippage and gaps: price can jump past your stop, so the real loss can exceed the planned one.
- Spread: it is a cost on every trade and is not part of the stop distance.
- Correlated trades: several positions open at once add their risks together.
- The stop-out level: if your account is stopped out before your stop loss, the formula's planned loss never happens. See the stop-out price guide.
A simple routine
- Choose a risk per trade you can live with, then keep it constant.
- Place the stop where your idea is proven wrong, not where the lot size is convenient.
- Calculate the lot with the lot size calculator.
- Log the trade afterwards in the trading journal.
Related tools
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Open tool →Limits and risk
This tool is educational. Results are estimates from the numbers you enter and are not investment advice. Trading CFDs is high risk and you can lose everything. Read the full risk warning