Prerequisite: Size the risk before the position
On a small screen, scroll the figure sideways or open it full size.
Read the figure
The 100-oz contract is assumed for this exercise. Verify the actual symbol specification and convert to account currency.
Learning objective
Translate a gold price distance into cash exposure using the actual contract.
The label XAU/USD does not define a universal lot size. Read contract size, tick size, tick value, minimum volume and volume step in the broker’s symbol specification. A gold CFD is a different contract from an exchange-traded gold future.
For a linear USD-quoted contract, approximate gross loss as lots × ounces per lot × adverse USD price move per ounce. Convert to the account currency when needed. Some contracts require a different profit formula; verify rather than applying this shortcut blindly.
Add commission and an execution allowance, then round volume down to the permitted step. A stop order does not guarantee the estimated loss during gaps or slippage. Keep the contract specification with the journal example.
Worked example
Hypothetical specification: 100 oz per lot. At 0.20 lots, a $5 adverse move is 0.20×100×5=$100 before costs. This is an assumed contract, not a specification for every broker.
Common mistakes
Never copy another broker’s tick value or assume every gold symbol uses 100 oz.
Practice
Record the demo symbol specification and independently check cash exposure for two volumes.
Sources & further reading
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My learning pathEditorial review: 15 October 2026 · AI-assisted technical review; independent specialist review pending.
Translation available · editorial review pending