Guide
How to read a gold trade idea (and when to skip it)
Entry zones, stop losses, targets and R-multiples, explained with one worked gold example and real numbers for a $1,000 and a $3,000 account.
A trade idea looks like a handful of numbers. Each one tells you something different, and the one that matters most isn’t in the message at all: your position size. Here’s a single example worked through from start to finish.
The example
XAU/USD Buy 4030 – 4034
Stop loss 4024
Target 4056
This is made up, but it’s the format most gold trade ideas use.
What a pip is on gold
On gold, one pip is a $0.10 move in price. So a move from 4030.00 to 4031.00 is 10 pips. On a standard lot (100 ounces), one pip is worth $10. On the smallest lot most brokers allow, 0.01, one pip is worth $0.10. More in what is a pip.
The entry zone
The analyst wants to buy anywhere between 4030 and 4034. You don’t need the perfect price, but you shouldn’t stray far from it. Most analysts say how far outside the zone they’d still accept an entry; if they don’t, ask.
If price is already at 4040 by the time you see the message, the idea is gone for you. Here’s why chasing hurts:
| Enter at 4032 | Chase at 4040 | |
|---|---|---|
| Distance to stop (4024) | 80 pips | 160 pips |
| Distance to target (4056) | 240 pips | 160 pips |
| Reward for each unit of risk | 3 : 1 | 1 : 1 |
Same idea, same stop, same target, and the late entry has twice the risk for a third less reward.
The stop loss and “1R”
The stop is where the idea is proven wrong. The distance from your entry to the stop is your risk on the trade, and traders call it 1R. Entering at 4032 with a stop at 4024, 1R is $8.00 of price, or 80 pips.
Everything else is measured in R:
- +1R = 4040 (80 pips above entry)
- +2R = 4048
- +3R = 4056, which is the target
Targets and managing the trade
The target is where the analyst expects the move to end. Many ideas list several targets (TP1, TP2, TP3), and analysts often suggest taking part of the profit along the way and moving the stop once the trade is in profit.
How to manage a trade after you’re in is where trade ideas differ most, and it’s what separates following an idea from just copying numbers. Inside Traders World each analyst publishes their own rules for this, and the academy covers it in depth.
One thing holds whatever the plan: a losing trade costs a full 1R, so the size of 1R in money is the most important decision you make.
Position size: the number you add yourself
Decide how much of your account you’re willing to lose if the stop is hit. Many traders use 1% or less.
$1,000 account, 1% risk: you can lose $10. With an 80-pip stop, $10 ÷ 80 pips = $0.125 per pip, which is 0.0125 lots. Brokers trade in steps of 0.01, so you round down to 0.01 lots and actually risk $8.
$3,000 account, 1% risk: you can lose $30. $30 ÷ 80 pips = 0.0375 lots, rounded down to 0.03 lots (risking $24).
Our lot size calculator does this for you and shows the money at each level.
A checklist before you press buy
- Is price still at or near the entry zone, or has it already run away?
- Have I set the stop loss in the order, not just in my head?
- Is my lot size worked out from my balance and the stop distance?
- Would I be fine if this trade hit its stop? And the next four?
If any answer is no, skip the trade. There will be another one.
Educational only, not financial advice. Trading gold with leverage can lose you money quickly.