Position sizing for gold

The formula

Position size equals the risk amount divided by (stop distance × value per unit of movement). On gold the standard contract is 100 troy ounces, so a $1.00 move is $100 per standard lot, and the formula becomes:

lots = (balance × risk%) ÷ (stop in dollars × 100)

Worked: a $1,000 account at 1.5% risk with a $10 stop gives (1000 × 0.015) ÷ (10 × 100) = 0.015 lots, which rounds to 0.01 or 0.02 depending on your rounding rule. The lot size calculator does this and shows the rounding effect.

Risk and stop distance are one decision, not two

Widening the stop while keeping the risk percentage fixed necessarily shrinks the position. Keeping the position while widening the stop increases the risk whether you intended it or not. Any conversation about position size that does not specify the stop is incomplete.

This is why a stop should be scaled to conditions rather than fixed in dollars. On gold, where volatility varies by a factor of several across the day, an ATR-based stop keeps the same rule producing appropriate distances in both quiet and violent sessions.

The two constraints that break the formula

First, volume is quantised. A calculation returning 0.004 lots must round up to the 0.01 minimum, which means your real risk is two and a half times what you configured. On small accounts this is the dominant effect and most calculators do not mention it.

Second, the formula assumes the stop is honoured exactly. It is not — see slippage. The modelled loss is a best case, and the gap widens precisely during the fast conditions that produced the loss.

What this means for account size

Required balance equals stop distance divided by risk percentage. A $10 stop at 1.5% needs about $667; the same stop at 1% needs $1,000; a $5 stop at 1.5% needs about $333.

That is why no honest minimum balance exists for a gold bot without a stated stop distance. Both levers move — see what account size do I need.