The basics of gold trading

Buying (long) or selling (short)

On XAUUSD, you can profit in both directions:

• Buy (long position): you bet on the price of gold rising. You profit if the price goes up.
• Sell (short position): you bet on a decline. You profit if the price goes down. This is one of the great advantages of CFD trading.

The pip and the point on gold

On XAUUSD, the price is usually displayed with two decimals (e.g. 2,650.25). Conventions vary between brokers, but the most common one is:

• 1 pip = $0.10 of movement (e.g. from 2,650.00 to 2,650.10).
• 1 point = $1 of movement (e.g. from 2,650 to 2,651), or 10 pips.

A "20-dollar" move on gold therefore equals 200 pips. Always check your broker's convention in the contract specifications.

Lots: the size of your position

On gold, the standard sizes are:

• 1 standard lot = 100 ounces. A $1 move = $100 of profit or loss.
• 1 mini lot (0.10) = 10 ounces. A $1 move = $10.
• 1 micro lot (0.01) = 1 ounce. A $1 move = $1.

Example: you buy 0.10 lot of XAUUSD at $2,650 and sell at $2,658. The move is $8 × 10 ounces = $80 profit. Had the price fallen to $2,642, the loss would have been $80. Starting with micro lots is the best way to learn without risking much.

The spread: the cost of every trade

The spread is the difference between the buy price (ask) and the sell price (bid). It is the broker's implicit commission: you start every trade slightly in the red by the amount of the spread. On XAUUSD, a spread of 20 to 35 cents is common at competitive brokers. The spread widens during economic releases and overnight: avoid those times as a beginner.

Leverage: handle with care

Leverage lets you control a position larger than your capital. With 1:100 leverage, $100 of margin controls $10,000 of gold.

• Advantage: profits are amplified proportionally.
• Danger: so are losses. High leverage on a volatile asset like gold can wipe out an account in minutes.

Margin is the amount the broker locks up to open the position. If your losses consume your available margin, the broker closes your positions automatically (margin call / stop out). A good beginner habit: use low effective leverage, even if the broker offers much more.

The essential order types

• Market order: immediate execution at the current price. The basic order for entering a position.
• Limit order: execution only at the price you set (or better). Useful for buying a pullback or selling a bounce.
• Stop order: triggered when the price reaches a level, often used to enter on a breakout.
• Stop loss (SL): the protective order that closes your trade if the price moves against you. Never trade without a stop loss.
• Take profit (TP): automatic close once your profit target is reached.

Tutorial: placing your first trade, step by step

1. Open a demo account with your broker (XM offers a free demo account) to practice without real money.
2. Analyze the XAUUSD chart: identify the trend and a key level (support or resistance).
3. Define your scenario before entering: entry point, stop loss, take profit. If you don't know where to put your stop, don't take the trade.
4. Calculate your position size so you risk only 1 to 2% of your capital (see the risk management guide).
5. Place the order with the stop loss and take profit set from the start.
6. Let the trade play out: don't move your stop loss "to give the market a chance" — that's the classic beginner mistake.
7. Log the trade in your ChimTradeApp journal: entry, exit, reason for the trade, emotions. This tracking is what will make you a better trader.

Key takeaways

• You can profit from rises (long) and falls (short) alike.
• 1 micro lot (0.01) = $1 per point: ideal for learning.
• The spread is a cost: trade during liquid hours.
• Leverage amplifies gains AND losses: use it modestly.
• Every trade must have a stop loss and a take profit defined in advance.

Next step: discover simple strategies to structure your trades.