Trading basics
Before your first trade you need to understand ten terms — as arithmetic, not as vocabulary. Everything after builds on them.
What do you buy when you “buy gold”?
With a CFD broker you own no gold and no currency. You enter a contract on the difference in price between the moment you open and the moment you close. That is why you can profit from a fall as well as a rise:
- Buy: you profit if the price rises after you enter.
- Sell: you profit if the price falls after you enter.
Two prices, not one
The broker always quotes two prices: the Bid (sell) and the Ask (buy). The gap between them is the spread, the first cost you pay — every trade starts with a small loss equal to the spread.
Contract size and the value of a move
On gold (XAUUSD) one full lot is 100 ounces at most brokers — confirm it on your broker's contract specifications. The value of each move follows from that:
| Trade size | Ounces | Profit or loss per $1 move |
|---|---|---|
| 1.00 lot | 100 | $100 |
| 0.10 lot | 10 | $10 |
| 0.01 lot | 1 | $1 |
What we mean by a “point”: in Consultya content, a point on gold is one dollar of price — from 4,000.00 to 4,001.00, for example. Some platforms call 0.01 or 0.10 a “point”, so mind the difference when reading other sources.
Leverage and margin
Margin is the amount the broker sets aside from your account to keep a position open; leverage sets its size. At 1:100, 1% of the position's value is held. Leverage changes what is held, not what you lose per dollar of movement — the subject of Leverage does not create profit.
When your free funds fall to a set level of the margin held, the broker closes your positions automatically (stop out). That level is in your account specifications; know it before you need it.
Swap
If a position stays open past the end of the trading day, a financing charge is added or deducted depending on its direction and the interest-rate difference. Many brokers charge it triple one night a week. Intraday trades are usually unaffected.
Order types
| Order | What it does |
|---|---|
| Market | Opens the trade immediately at the best available price. |
| Limit | Enters at a better price than now: buy lower, or sell higher. |
| Stop | Enters when price breaks a level: buy higher, or sell lower. |
| Stop loss (SL) | Closes the trade at the loss limit you decided in advance. |
| Take profit (TP) | Closes the trade at the target. |
A rule with no exceptions: no trade without a stop loss placed when it opens. The stop you will “add in a minute” is the stop you will not add once price moves against you.
When does gold move? (Jordan time)
| Session | Summer | Winter |
|---|---|---|
| London open | 10:00 | 11:00 |
| New York open | 15:00 | 16:00 |
| 8:30 New York releases | 15:30 | 16:30 |
| Short daily market break | 00:00 – 01:00 | 01:00 – 02:00 |
Jordan time is fixed all year while Europe and the US change their clocks, so everything shifts an hour later in winter. Gold is usually most active when the London and New York sessions overlap.