Gold vs forex pairs for automated trading

The sizing trap

At 0.01 lots gold controls one troy ounce, so a $1.00 move is exactly $1.00 — a convenient correspondence that makes the arithmetic easy and the danger easy to miss. A perfectly ordinary $20 day is $20 per micro lot in either direction.

A $2 stop on gold is not tight, it is a coin flip against normal noise. Stops should scale to ATR rather than to a dollar figure carried over from a currency pair, and position size should follow from the stop — see position sizing.

Cost and why it changes strategy design

The XAUUSD spread is wide relative to FX majors and widens further at exactly the moments that generate the most signals. Any gold strategy has to clear a higher cost bar than the same idea on EURUSD, which pushes gold systems toward larger targets.

Ours refuses gold entries above $1.00, and it is worth being precise about what that is worth. Measuring a year of five-minute bars on our broker, spread exceeded $1.00 in 3 bars out of 70,546. On this feed the guard is insurance against a rare event rather than a filter doing daily work — on a wider standard account it would fire far more often.

Concentration

Our engine trades XAUUSD and nothing else. The argument in favour is that every parameter and filter can be tuned to one market's behaviour rather than compromised across several; the argument against is that a single-instrument system has no diversification whatsoever, and that is a real cost rather than a rhetorical one.