How do you start trading gold, and what is different about it?

What you are actually buying

When you open XAUUSD with a retail broker you are not buying gold and nothing is shipped to you. You are opening a contract on the difference in price between the moment you enter and the moment you leave; gold here is the reference, not the goods.

That explains a question that comes up constantly: how can you sell without owning anything? Because you are not selling metal - you are opening a contract the other way round.

Physical gold - a bar, a coin - is a different market entirely: you pay the full price, you pay a making charge, and you need somewhere to keep it. In practice the two have nothing to do with each other.

The contract is heavier than you think

This is where the first mistake happens. A standard lot of gold is one hundred ounces, so every single dollar the price moves is one hundred dollars in your account.

And gold moves twenty or thirty dollars on an ordinary day. Work it through: one lot on a quiet day means two to three thousand dollars of swing in your balance.

• 0.01 lot - the smallest size, where one dollar of movement is one dollar to you.
• 0.10 lot - ten dollars for every dollar of movement.
• 1.00 lot - one hundred dollars for every dollar of movement.

So somebody moving from a currency pair to gold at the same size is not increasing their risk slightly. They are multiplying it several times over while believing they changed nothing.

Its real hours are two

Gold is available almost around the clock, but its movement is not spread across it. Most of what matters happens in a narrow window: the overlap of the London and New York sessions.

Outside it the market thins: fewer orders resting, a wider spread, and a small move filling at a worse price than you wrote.

The practical conclusion for a beginner: do not start trading in a quiet hour because it feels "safe". Quiet here means less liquidity, not less risk.

What actually moves it

Gold has no earnings and pays no dividend, so its price is not a valuation of a company. It is essentially a vote on the alternative: the higher the risk-free return on the dollar, the more it costs to hold a metal that yields nothing.

Which is why its largest moves come around inflation data, interest rate decisions and central bank speeches - not around news from gold mines.

The practical rule: before you open a position, look at the economic calendar. The site's news page carries it.

The first steps, in order

• Start at 0.01 lot whatever your balance, so you can see with your own eyes how far the account moves.
• Work out your stop in dollars, not in points, because a point of gold is not a point of EURUSD.
• Trade inside the London-New York window at first, and avoid the thin hours.
• Do not open a position before looking at that day's economic calendar.

And for the exact size given your balance and your stop, use the position size calculator on this site - no sign-up.