How to trade gold (XAU/USD) step by step

What gold is and how a gold CFD works

Gold is a physical metal that trades globally against the US dollar under the code XAU/USD, so its price is quoted in dollars per ounce. A CFD on gold is a contract with your broker that mirrors that price movement without you owning or storing any metal. You profit or lose on the difference between your entry and exit price, and the position is settled in cash.

Because XAU/USD is priced in US dollars, a South African trader carries two exposures at once: the gold price and the rand-to-dollar exchange rate. A move in USD/ZAR can change what your profit or loss is worth in rand even when the gold price itself has not moved. Keep that in mind when you review results in rands.

Lots, contract size and what one pip is worth

Gold is traded in lots, and one standard lot equals 100 ounces of the metal. The pip for XAU/USD is 0.01, so a one-cent move in the dollar price is one pip. With a reference price around 4275.0, a full standard lot moves roughly $1 for every pip, because 100 ounces multiplied by 0.01 equals one dollar.

Position size is set by the lot you choose, not by how much cash you put up. A 0.10-lot position is 10 ounces, so each pip is worth about $0.10; a 0.01-lot micro position is 1 ounce, so each pip is worth about $0.01. Decide the lot first, because it fixes the money value of every pip before you think about direction.

Leverage and margin, and why the cap is not a target

Leverage lets you open a gold position larger than the cash you post as margin. In South Africa the maximum available is up to 1:200 for retail clients, and up to 1:500 for eligible or professional clients depending on the instrument. That is a ceiling set by the rules, not a setting you should aim to use on every trade.

Margin is the deposit locked against an open position. At 1:200, a 0.10-lot gold position needs about $85.50 margin. Note that your account currency matters here: if you fund in rand, the broker converts that dollar margin at the prevailing rate, so the rand amount will shift with USD/ZAR. Higher leverage lowers the margin required but raises the risk per pip relative to your balance.

Sizing a trade to a fixed risk

Size every gold trade from the risk you are willing to lose, not from the margin you can afford. Pick a rand amount you accept losing if the stop is hit, convert it to dollars, then divide by the distance between entry and stop in pips multiplied by the pip value. That gives you the lot size. The stop distance, not your confidence, decides the size.

A worked example: if you accept a $50 loss, your stop is 100 pips away, and one pip is worth $0.10 on a 0.10-lot position, then 100 pips times $0.10 equals $10 of risk per 0.10 lot, so $50 of risk allows 0.50 lots. Run this sum before every trade. It keeps a single bad call from undoing a week of good ones.

The real cost of a gold trade: spread plus overnight swap

The cost of a gold CFD comes from two places: the spread and the overnight swap. The spread is the gap between the buy and sell price, and you pay it on entry because you open at the less favourable side. It varies with market conditions, liquidity and the session, so check the live quote on your platform rather than assuming a fixed figure.

The overnight swap is a financing charge or credit applied when you hold a position past the daily rollover. It depends on your position direction, the size of the position and prevailing interest-rate conditions, and it can accumulate over days or weeks. If you plan to hold gold for a while, treat the swap as part of the cost of the trade, not an afterthought.

Placing a stop and managing the trade

Place your stop-loss at the same time as your entry order, at a level the market would have to reach to prove your idea wrong, not at a round number that merely suits your wallet. On gold, allow for normal volatility so the stop is not clipped by routine noise. Once the position is open, the stop defines your maximum loss and should only move in your favour.

Managing a trade means deciding in advance what you will do if it goes right. You can take a fixed target, trail the stop behind price, or close part of the position. What matters is that the exit plan is set before emotion enters. Avoid widening a stop to avoid a loss; that single habit turns a planned small loss into an account-threatening one.

Beginner mistakes specific to gold

The most common gold mistake is treating it as a slow, safe metal and therefore over-sizing. XAU/USD can move sharply within a session, and a large lot turns an ordinary swing into a large loss. The second is ignoring the rand: traders watch the dollar chart and are surprised when their rand result differs because USD/ZAR moved at the same time.

Other frequent errors include holding positions through major US data releases without a plan, letting the overnight swap quietly erode a long-held position, and using the maximum leverage simply because it is available. Each of these is avoidable with a written plan: fixed risk per trade, a stop placed at entry, and a check of costs before holding overnight.

A realistic first gold trade

A sensible first trade is small and fully planned. Choose the 0.01-lot micro size, which is 1 ounce and about $0.01 per pip, so the sums stay easy to follow. Decide your stop distance in pips, calculate the dollar risk, confirm it fits your rand budget, and only then place the entry with the stop attached in the same order.

Before trading live, confirm which FxPro entity your account is opened with and note the regulatory position: FxPro is licensed by the FCA (UK) and CySEC, and an FxPro entity holds an FSCA licence in South Africa, so check which entity your own account is opened with. Fund in rands through local cards, bank transfers or e-wallets, trade the micro size, and review the result in rand against your plan.

Your First Week on the Demo Account: What to Test Before You Risk a Rand

The first week on a demo account should be spent testing platform mechanics and order behaviour, not chasing profits. Open a demo on the platform you intend to use, confirm that gold appears as XAU/USD with a contract size of 100 oz and a pip of 0.01, and place small test orders at different times of day. You are checking that you understand how to enter, modify and exit, and how the platform displays margin and equity when you hold a gold position. Do not judge yourself on the demo profit and loss.

Test the order types you will actually rely on, including market orders, pending orders and stop-loss orders, and watch how each behaves when the reference price is moving. With gold near 4275.0, a one-dollar move is 100 pips, so even a quiet session can produce visible changes in your account balance. Place a 0.10-lot trade and confirm the margin requirement matches the worked example of about $85.50 at 1:200. If the figure differs, check whether your demo account is set to a different leverage tier before you assume the platform is wrong.

Record what you test each day, including the time, the order type, the platform response and any error message. Test funding and withdrawal flows on the demo only to learn where they sit in the interface, and note that live funding in South Africa uses local cards and bank transfers in ZAR, plus e-wallets. Do not test a strategy for profitability in week one. The goal is to make the mechanics boring, so that when you trade live your attention is on risk and price, not on finding the stop-loss button.

What to Write in a Gold Trade Journal So It Stays Useful

A gold trade journal should record the decision, not just the outcome. For every trade, write the date and time, the direction, the entry price, the stop level and the target, the lot size, and the margin used. Add the reason you took the trade in one sentence, and the reason you closed it in one sentence. The outcome in rand matters, but it is the least instructive line. A journal that only lists profit and loss tells you nothing about whether the process was sound.

Record the market context at entry, including the approximate XAU/USD price, the time of the session and any scheduled event you were aware of. Note the spread you observed at entry and whether you held the position overnight, because the cost of a gold trade includes the spread plus any overnight swap. If you are unsure of the swap, write that you are unsure rather than guessing a number. Over a month, these context notes reveal whether your losses cluster around particular sessions or around trades held through the daily rollover.

Keep the journal in a format you will actually update, whether a spreadsheet or a printed sheet, and review it weekly rather than after every trade. Look for repeated behaviour: the same mistake three times is a rule you have not written yet. Include a line for what you would do differently, phrased as an instruction, not a feeling. If you trade through FxPro, note the entity your account is opened with, because the regulator caveat for South Africa is that FxPro is licensed by the FCA and CySEC, and an FxPro entity holds an FSCA licence — check which entity your own account is with.

Turning Position Sizing Into a Habit You Do Not Have to Recalculate

Position sizing becomes a habit when the lot size is decided before the entry, not after. Choose a fixed risk amount in rand per trade, convert it to dollars at your platform's rate, and calculate the lot size from the stop distance in pips. With gold, one pip is 0.01 and one standard lot is 100 oz, so the arithmetic is consistent every time. Do this on a calculator or a pre-built sheet before you look at the chart, and write the result in your journal. The habit is the order of operations, not the number.

The rule that makes sizing automatic is a maximum lot size per trade, set in advance and never exceeded regardless of how confident you feel. If your calculated size is larger than that cap, you take the cap, not the calculation. This prevents a wide stop from silently increasing your risk. For reference, a 0.10-lot gold position needs about $85.50 margin at 1:200, but margin is not risk; the stop distance and lot size together determine what you can lose. Keep the two ideas separate in your routine.

Review your sizing habit at the end of each week by checking whether every trade used the pre-calculated size. A single oversized trade is a signal that the habit slipped, even if it made money. Do not adjust your risk per trade after a loss to win it back, and do not increase it after a win. The leverage available in South Africa is up to 1:200 for retail and up to 1:500 for eligible or professional clients depending on instrument, but that is a cap, not a setting to aim at. Your lot size should look the same whether leverage is 1:200 or 1:500.

The Three Most Expensive Beginner Mistakes and the Rule That Prevents Each

The most expensive beginner mistake in gold is trading without a stop-loss, and the rule that prevents it is that no order is placed without a stop level written down first. Gold near 4275.0 can move 100 pips on a one-dollar change, so an unprotected position can lose more than the account can absorb before you react. The rule is mechanical: if you cannot state the stop price and the rand risk before entry, you do not take the trade. This single rule removes the largest source of catastrophic loss.

The second mistake is sizing by margin rather than by risk, which happens when a trader sees that 0.10 lots needs about $85.50 margin at 1:200 and assumes that is the most they can lose. The rule that prevents it is to calculate the loss at the stop, in rand, before placing the order, and to reject any trade where that loss exceeds your fixed risk amount. Margin is a deposit, not a loss limit. Write both figures in the journal so the difference becomes obvious over time.

The third mistake is revenge trading after a loss, usually by doubling the lot size to recover quickly. The rule that prevents it is a mandatory pause after any loss that exceeds your planned risk, with no new order until the next session and until the journal entry is complete. A second rule is a daily loss limit in rand, after which the platform is closed for the day. Neither rule requires prediction; both require only that you follow the sequence. The cost of a gold trade includes the spread plus overnight swap, and revenge trading multiplies both.

How to Review a Week of Gold Trades Without Fooling Yourself

A weekly review should answer three questions: did every trade follow the written rules, what did the costs total, and what single change would have improved the week. Do not start with profit and loss. Start with rule adherence, because a profitable week that broke the rules is a warning, not a success. Count the trades, count the rule breaks, and read the journal entries for the trades that broke rules. The review is a check on behaviour, and the rand result is a by-product you record but do not lead with.

Calculate the costs you can observe, including the spread at entry and any overnight swap charged on positions held past the daily rollover. If you do not know the swap, mark it as unknown and check your statement rather than estimating. On gold, a position held for several days can accumulate swap that changes the economics of the trade, so the review should flag every trade held overnight. Compare the cost total with the gross result to see what the strategy actually earned after costs.

End the review by writing one rule for the coming week, phrased as an instruction you can follow without interpretation. Examples include no trades in the first fifteen minutes of your session, or no more than two gold trades per day. Keep the rule for one week and review it again. The regulator caveat for South Africa is that FxPro is licensed by the FCA and CySEC, and an FxPro entity holds an FSCA licence — check which entity your own account is opened with, because the entity affects the protections and costs that apply to your account.

What to Check on the Platform Before You Place a Live Gold Trade

Before placing a live gold trade, confirm four things on the platform: the instrument code is XAU/USD, the contract size is 100 oz, the pip value displays as 0.01, and the margin requirement matches your expected leverage tier. With gold near 4275.0, a 0.10-lot position should require about $85.50 margin at 1:200. If the platform shows a different margin, stop and check your account settings rather than assuming the platform is wrong. These four checks take under a minute and prevent the most common setup errors.

Check the order ticket for the stop-loss and take-profit fields before you enter the market price, and confirm that the stop distance in pips matches the calculation in your journal. Confirm the lot size is the one you calculated, not a default. Check the platform clock and the daily rollover time, because a position opened shortly before rollover may incur a swap you did not plan for. If you are trading through FxPro, the platforms available are MT4, MT5, cTrader and FxPro Edge, and the ticket layout differs between them, so learn the fields on the platform you actually use.

Confirm your funding method is available for live trading in South Africa, which includes local cards and bank transfers in ZAR, plus e-wallets. Check the account currency and the conversion that applies to your rand deposit, because a dollar-denominated account converts your ZAR at the platform's rate. Finally, check which entity your account is opened with, since the regulator caveat for South Africa is that FxPro is licensed by the FCA and CySEC, and an FxPro entity holds an FSCA licence — check which entity your own account is opened with. Do these checks once, then repeat them only when something changes.