I watched a guy blow $8,000 on one gold trade. He had no clue about lot sizes. Thought he was trading 0.1 lots. Nope — 1.0 lot. Eight months of savings gone in minutes.
Position sizing is the most overlooked thing in trading. You can have the best strategy in the world — get the size wrong and you're done. Here's how I handle lot sizes for XAUUSD on MT4.
Gold Lot Sizes — The Basics
| Lot Type | Units | Pip Value (XAUUSD) |
|---|---|---|
| 1.00 (Standard) | 100 oz | ~$10 per pip |
| 0.10 (Mini) | 10 oz | ~$1 per pip |
| 0.01 (Micro) | 1 oz | ~$0.10 per pip |
Pip values shift a bit by broker. Double-check in MT4.
My Formula
Same one every time:
Position Size = (Account Balance × Risk %) / (Stop Loss in Pips × Pip Value)
Example — $5,000 account:
- Risk: 2% = $100
- Stop loss: 500 points (based on ATR)
- Pip value for 0.01 lot: $0.10
- Max position: $100 / (500 × $0.10) = 2 micro lots (0.02 lots)
Tiny, right? That's the whole point. Most beginners see 0.02 lots and think "why bother?" The point is survival. With 0.02 lots and 2% risk, I can be wrong 20 times straight and still have money. The guy risking 0.10 lots (10% per trade) on the same setup? Wiped out in 4 losses.
My MT4 Shortcut
I keep a notes file with pre-calculated sizes for my most common account balances:
| Account | 2% Risk | Stop 200 pts | Stop 500 pts |
|---|---|---|---|
| $2,000 | $40 | 0.02 lots | 0.01 lots |
| $5,000 | $100 | 0.05 lots | 0.02 lots |
| $10,000 | $200 | 0.10 lots | 0.04 lots |
| $25,000 | $500 | 0.25 lots | 0.10 lots |
| $50,000 | $1,000 | 0.50 lots | 0.20 lots |
I check this before every trade. Takes the math out of the moment so I can focus on the setup.
Common Mistakes I See
Mistake 1: Same lot size every trade. If your stop is 200 points one day and 500 the next, the size has to change to keep dollar risk constant. Simple.
Mistake 2: Getting bigger after wins. Winning streaks mess with your head. I don't increase my risk percentage based on recent results. 2% is 2%, whether I'm up 10% or down 10%.
Mistake 3: "I'll just move my stop if it gets close." No. Your stop is your max risk. Moving it mid-trade is breaking the plan. If you can't handle the stop distance, reduce size — don't shrink the stop.
The Golden Rule
Your position size isn't about how much you want to make. It's about how much you're willing to lose. Calculate from the loss first. If the resulting size feels too small, your account is too small — not your position size.
— Lin