[Basics] [Basics] Lots, leverage, margin and stop-out explained

Most blown accounts are caused not by the strategy but by size (lots). Remember the numbers below and you'll avoid the big accidents.

Lot

• The unit of trade size. For gold CFDs, usually 1 lot = 100 oz
• 0.01 lot: a $1 move in gold = ±$1
• 0.10 lot: a $1 move = ±$10
• 1.00 lot: a $1 move = ±$100
• Gold often moves $20–$50+ in a day. 1 lot on a $1,000 account can be gone in a single day

Leverage

• Lets you trade an amount many times larger than your account (1:100, 1:500, 1:1000…)
• Higher leverage doesn't make P&L bigger by itself — it lets you open bigger lots. Lot size decides P&L
• Higher leverage ties up less margin, leaving more room before stop-out, but it also tempts you into bigger lots

Margin

• The collateral the broker locks when you open a position
• Margin level (%) = equity ÷ used margin × 100
• Visible at the bottom of the MT5 Toolbox → Trade tab

Margin call and stop-out

• Margin call: a warning when margin level drops below a set % (e.g. 100%)
• Stop-out: if it falls further, the broker force-closes the biggest losers first (e.g. 50% or 20%, depending on the broker)
• A stop-out isn't your stop loss — it's being cut at the worst price. If you get there, it's already too late

A formula for safe size

1. Decide how much you can lose on one trade: 1% of the account ($10 on $1,000)
2. Decide the stop distance in gold price: e.g. $5
3. Lots = money you can lose ÷ (stop distance × 100) → $10 ÷ ($5 × 100) = 0.02 lot