Gold (XAU/USD): how it differs from currencies
What you learn in 3 minutesGold (XAU/USD) is not a currency pair. Its contract size, its pip value and its daily range are all different from EUR/USD. That changes how much money is at risk on each trade. Here you work out the pip value of gold on a small position and compare the stop distance with EUR/USD, in pesos.
One pip on 0.10 lots of gold, and a 200-pip stop
| Step | Amount | Note |
|---|---|---|
| Contract size for gold | 100 troy ounces per 1.00 lot | Standard for XAU/USD; some brokers use 10 ounces, so check the contract specification |
| Your position | 0.10 lots | 0.10 x 100 ounces = 10 ounces |
| One pip on gold | USD 0.01 move in the gold price | Gold is usually quoted to two decimals, so the second decimal is the pip |
| Value of one pip on 0.10 lots | USD 0.10 | 10 ounces x USD 0.01 = USD 0.10 |
| Convert to pesos | ₱5.80 | USD 0.10 x ₱58.00 per USD = ₱5.80. The rate varies between brokers and over time |
| Stop distance on gold | 200 pips | A common gold stop; 200 x USD 0.01 = USD 2.00 price move |
| Risk on that stop | ₱1,160 | 200 pips x ₱5.80 per pip = ₱1,160 |
| Same 200 pips on EUR/USD, 0.10 lots | ₱116 | One pip on 0.10 lots of EUR/USD is USD 1.00, or ₱58.00. 200 x ₱58.00 = ₱11,600. Wait, that is ten times more. Check: 0.10 lots = 10,000 units. 10,000 x 0.0001 = 1 unit of quote currency per pip = USD 1.00. 200 pips = USD 200 = ₱11,600. So gold at ₱1,160 is ten times smaller for the same pip count |
Your broker may round the pip value, charge a spread on top, or quote gold with a different contract size. Swap or financing charges also apply if you hold overnight. All figures here are illustrative.
The mistake people make here
People treat gold like a currency pair and use the same stop distance in pips. A 200-pip stop on EUR/USD at 0.10 lots risks about ₱11,600, but the same 200 pips on gold at 0.10 lots risks about ₱1,160. The peso risk is not the same. Always recalculate the pip value for the instrument you are trading, then set the stop so the money at risk fits your plan. Do not copy a stop size from one market to another without doing the arithmetic.Check yourself
You trade 0.10 lots of XAU/USD. One pip is USD 0.01. The USD/PHP rate is ₱58.00. What is one pip worth in pesos?
0.10 lots = 10 ounces. 10 x USD 0.01 = USD 0.10. USD 0.10 x ₱58.00 = ₱5.80.
You set a 150-pip stop on that gold position. What is the risk in pesos?
150 pips x ₱5.80 per pip = ₱870.
On EUR/USD at 0.10 lots, one pip is USD 1.00, or ₱58.00. How many pips can you risk on EUR/USD for the same ₱870?
₱870 ÷ ₱58.00 per pip = 15 pips.
In the Philippines
- Regulator
- SEC Philippines
- Money
- Peso, written ₱ (PHP)
- Common payment methods
- GCash and bank transfer
- Instrument in examples
- EUR/USD, around 1.0850
- Pip value on one standard lot of EUR/USD
- 10 units of the quote currency (100,000 x 0.0001), converted at the current rate