Position Sizing XAUUSD: How to Calculate Lot Size from Stop-Loss (With Examples and a Checklist)

Executive summary

Position sizing turns risk rules into reality. You will learn how to calculate your XAUUSD lot size from your monetary risk, your stop distance, and your broker contract specification (what 1.00 lot means). If you size from feelings instead of stop distance, your risk becomes random. This lesson gives a sizing workflow and checklist you can repeat.

Learning objectives

• Compute lot size from stop distance and risk in dollars
• Validate broker contract specs for XAUUSD
• Build a sizing checklist you can repeat

Institutional workflow

Sizing workflow: choose $ risk -> measure stop -> confirm $/1 move -> compute size -> round down -> place bracket.

Core lesson

Position sizing turns risk rules into reality. You will learn how to calculate your XAUUSD lot size from your monetary risk, your stop distance, and your broker contract specification (what 1.00 lot means).

If you size from feelings instead of stop distance, your risk becomes random. This lesson gives a sizing workflow and checklist you can repeat.

Position sizing with a professional convention

Use fixed monetary risk per trade:

• Account: $5,000
• Risk per trade: 1% = $50
• Stop distance: $3.00

You need one broker-specific input:

• PnL change if gold moves $1.00 for 1.00 lot

If 1.00 lot equals 100 ounces:

• $1 move = $100 per 1.00 lot
• Risk per 1.00 lot = $3 x $100 = $300
• Size = $50 / $300 = 0.16 lots (round down)

Discipline rule

If minimum lot size forces you to over-risk, skip the trade. Survival beats activity.

Concept deep dive

Position sizing is what converts your analysis into controlled risk. If you keep the same lot size while your stop distance changes, your risk is inconsistent. Inconsistent risk produces inconsistent psychology. Inconsistent psychology produces inconsistent execution.

The professional method is always the same: 1) Decide risk in dollars. 2) Measure stop distance in dollars. 3) Convert that into the correct position size using your broker's contract spec.

The only "hard part" is contract specs. Brokers define XAUUSD lots differently. Some use 1 lot = 100 oz, others 1 lot = 10 oz, others use units. You must test and confirm what a $1 move does to PnL at 1.00 lot.

Worked example

Account: $10,000 Risk per trade: 0.5% = $50 Stop distance: $4.50

You test your broker and learn that at 1.00 lot, a $1 move equals $100. So risk per 1.00 lot = 4.5 x 100 = $450 Your size = 50 / 450 = 0.11 lots (round down to 0.10)

If the stop distance doubles, your size halves. That is professional adaptation.

Sizing checklist

• Stop distance measured from entry to invalidation level
• Value per $1 move confirmed for your broker
• Size rounded down
• Total open risk checked

Glossary

• Contract spec: broker definition of lot size and value per move.
• Round down: reduce size to stay within risk limits.

Implementation worksheet

Lot size quick formula (conceptual)

Position size = Risk amount / (Stop distance x Value per $1 move at 1.00 lot)

You must know your broker's value per $1 move. Do not guess.

Sizing table drill

Pick three stop sizes you often see:

• $2.50 stop
• $5.00 stop
• $8.00 stop

Assume $50 risk and compute sizes for each. The point is to see how size changes automatically with volatility.

Minimum size constraint

If the broker minimum lot forces risk above your limit, you do not trade. Use demo or change broker conditions. This is a professional constraint, not weakness.

Checklist you can use today

• Calendar checked and event risk understood
• Levels or conditions defined before entry
• Stop-loss placed at structural invalidation
• Position size calculated from stop distance (risk in dollars)
• Order type chosen intentionally (market/limit/stop) and bracketed
• Trade logged in journal with R risk and plan notes

Common mistakes to avoid

• Using fixed lot size, rounding up size, not confirming contract specs.

FAQ

Q: How do I calculate lot size for XAUUSD?

A: Risk amount divided by (stop distance x $ value per $1 move). Confirm contract size.

Q: My broker uses different lot definitions, what do I do?

A: Check contract specs or test a tiny position to measure PnL per $1 move.

Q: Why do I need a sizing calculator?

A: Because stop distance changes. Without sizing, risk becomes random.

More questions beginners ask

Q: Why does position sizing feel complicated?

A: Because brokers define lots differently. Once you confirm contract specs, sizing becomes a simple formula.

Q: Should I use a fixed stop size to simplify?

A: No. Stops should be structural. Use position sizing to keep risk consistent, not fixed stops.

Q: What should I do if my calculated size is below minimum?

A: Skip the trade or use demo. Forced oversizing is how accounts get damaged.

Quick quiz

1. What is the main decision framework taught in Lesson 6?
2. What is one checklist item you must follow before every trade?
3. What is the most common mistake highlighted in this lesson?
4. What is one practical task you can complete today to apply this lesson?

Practical assignment

• Apply the workflow to a fresh chart review (no trading required).
• Write a 5-line summary in your journal focused on rules, not predictions.
• Save one screenshot that shows your levels/plan/order structure.

Key takeaways

• Trade a process, not a feeling.
• Define risk before you define reward.
• Repeat simple rules until they become automatic.