LEARN THE LANGUAGE
Gold trading glossary
Every term a new gold trader meets in their first month — defined in plain English, with links to the guides that go deeper. Bookmark it; the vocabulary is the easy half of trading, but only once it's actually learned.
The market
- XAU/USD
- The ticker for gold priced in US dollars — one XAU/USD price is what one troy ounce of gold costs in dollars. It is the market the entire MGT community specialises in. Our guide to gold trading →
- CFD (Contract for Difference)
- A leveraged agreement to exchange the difference in an asset's price between opening and closing a trade. You never own the gold itself — you trade the price movement, which is why losses as well as gains are magnified by leverage.
- Leverage
- Trading a position larger than your deposit by borrowing exposure from the broker. Leverage magnifies profits AND losses equally — it is why CFD trading carries a high level of risk and why position sizing matters more than any other skill. Pips and lot sizes explained →
- Margin
- The money your broker sets aside to hold a leveraged position open. If losses eat into the margin, the broker can close the trade (a margin call) — another reason defined stops come first.
- Spread
- The gap between the buy price and the sell price. It is the broker's cut on every trade, and it widens in quiet hours and around big news — one reason trading the liquid sessions is cheaper than trading the dead ones. Best times to trade gold →
- Liquidity
- How easily a market absorbs orders without moving the price against you. Gold is one of the most liquid markets on earth — but liquidity still thins badly outside the London and New York hours.
Placing trades
- Long / Short
- Long means buying because you expect the price to rise; short means selling because you expect it to fall. On gold CFDs both directions are one click — you can profit from falls as well as rises (with equal risk).
- Entry
- The price where a trade is opened. Good entries sit at pre-planned levels — zones, structure, session behaviour — never mid-spike after a move has already happened.
- Stop loss
- A pre-set order that closes the trade at a defined loss, at the price where the trade idea is proven wrong. Every MGT trade idea carries one. A trade without a stop has undefined risk — there is no honest way to size it. The mistakes that end accounts →
- Take profit
- A pre-set order that closes the trade in profit at a target level. Set with the trade, so management isn't left to emotion in the moment.
- Lot
- The size of a trade. One standard XAU/USD lot is 100 ounces, so a $1.00 gold move is $100 per lot. Brokers quote in 0.01 steps — 0.01 lots is 1 oz, $1 per $1 move. Lot sizes explained →
- Pip / Point
- Unlike forex, gold has no universal pip convention — some traders mean $0.10 of movement, some $1.00. The unambiguous habit is to quote distances in dollars: 'stop $5.00 away' means the same thing to everyone. Why dollars beat pips →
- Slippage
- The difference between the price you expected and the price you actually got — usually around fast markets or thin liquidity. Defined stops and liquid sessions keep it rare and small.
Risk
- Risk per trade (the 1–2% rule)
- The share of your account you stand to lose if the stop is hit. The community rule is 1–2%: a trader risking 2% can be wrong ten times and still hold 80% of the account. Size is calculated from the stop distance — never chosen by feel. Position size calculator →
- Position sizing
- Turning a stop distance and a risk budget into a lot size: lots = (balance × risk %) ÷ (stop distance × 100), rounded down. The single most important calculation in trading — and the most commonly skipped by beginners. Run the calculator →
- Risk–reward ratio
- The relationship between what a trade risks and what it targets. A 1:2 trade risks $5 to make $10 — which means a trader can be wrong more often than right and still profitable. Trade ideas without a stop have no risk–reward, only hope.
- Drawdown
- The peak-to-trough decline in an account. Managing drawdown — through sizing and discipline, not by removing stops — is what keeps a trader in the game long enough for skill to matter.
- Revenge trading
- Immediately re-trading after a loss, bigger and angrier, to 'win it back'. It is how one ordinary losing trade becomes a terrible day. The structural fix: after any loss, the next trade runs at normal size or the session ends. Seven mistakes to avoid →
Sessions & analysis
- London session
- The European trading day, from roughly 8am UK. Often sets gold's early range and delivers the first serious reaction to overnight news. The gold trading day in UK time →
- New York overlap
- Roughly 1:30–4:30pm UK, when London and New York trade together — the most liquid, most active window of the gold day, and where the biggest moves most often happen.
- Asia session
- The overnight UK window. Typically calmer, range-based gold — the reason MGT runs a dedicated Asia room for traders who prefer the quieter hours.
- Support and resistance
- Price levels where buying or selling has repeatedly stepped in. Zone-based trading — marking those areas in advance and trading the reaction — is the backbone of several MGT desks.
- Market structure
- The pattern of highs and lows that shows whether a market is trending up, trending down or ranging. Reading structure is a core MGT education topic, taught before any strategy.
- CPI (Consumer Price Index)
- The US inflation report, released at 1:30pm UK. One of the biggest scheduled movers of gold, because it shifts interest-rate expectations — which shift the dollar and the price of gold with it. What moves the gold price →
- FOMC / the Fed
- The US Federal Reserve and its rate-setting committee. Interest-rate decisions (7pm UK) move gold directly: higher expected rates are historically a headwind for gold, lower expected rates a tailwind.
Vocabulary learned, risk understood — the next step is practising it with people who trade the same market every session. The full MGT room set, education and meetups are free membership — the £300 is a broker deposit into your own PU Prime account.
Trading CFDs involves a high level of risk; leverage can magnify losses and it is possible to lose more than your deposit. See our risk disclosure.