After 1,000 Trades, I Stop Guessing Tops and Bottoms
I've traded gold for ten years. I blew up two accounts in the first three years, then slowly ground it out. By the start of this year, my live trade count had just passed 1,000. Of those, over 300 were breakout trades during the US session, over 200 were failed-breakout reversals during the London open, and the rest were scattered across the narrow Asian range. I don't look at MACD or RSI—my screen only has candlesticks, prior highs and lows, and a 20-day moving average. I'm writing this not to teach anyone how to make money, but to lay out the pitfalls I've stepped in and the rules I've revised, like flipping through a trading journal.
A Stop Loss Isn't an Option—It's Breathing
The most common thing I did early on was set a stop loss and then manually cancel it. In March 2018, gold hovered around 1320 for three days. I shorted one lot with a stop at 1326. A minute before the data release, price spiked to 1326.5, and I manually canceled the stop, thinking "it'll come back." That day it ran up to 1335. I held through a 9-dollar move, lost $900 on one lot, and my account shrank 18% on the spot. After that trade, I set a hard rule: every position must have a stop loss from entry, with distance based on ATR. When gold's daily ATR is 12–15 dollars, I place the stop at 1.5x ATR, about 20 dollars. Sounds wide, but position size shrinks accordingly—one lot is 100 ounces, so a 20-dollar stop means $2,000 risk. I only risk 2% of my account, so with a $20,000 account I trade just 0.2 lots. I've used this ratio for six years and never changed it.
Position Size Is Calculated, Not Felt
Many people ask why I don't trade 0.5 lots or more. I say it's not that I don't want to—it's that after doing the math, I don't dare. Gold is volatile; the US session often moves 15 dollars in half an hour. If you trade 1 lot, that's a $1,500 swing, and even a $50,000 account can't survive three consecutive losses. My formula is simple: account equity × 2% ÷ stop distance (in dollars) ÷ 100 = lot size. For example, with a $30,000 account and a 20-dollar stop, lots = 30000 × 0.02 ÷ 20 ÷ 100 = 0.3 lots. That way, even after ten straight losses, the account only draws down 20%, leaving room to recover. I've seen too many people trade 0.5 lots of gold with a 5-dollar stop, get stopped out by normal volatility, and then curse the market. The market isn't wrong—your position size and stop loss don't match.
Trade Only One Pattern: Prior High/Low + Failed Breakout
Of my 1,000 trades, 80% of my winners came from the same scenario: a narrow Asian range, then at the London open a false breakout above the Asian high, quickly reversing back, forming a 15-minute reversal signal. For example, on February 14 this year, gold ranged between 1990 and 1995 in Asia. At the London open it spiked to 1997, then pulled back to 1993 within five minutes. I shorted at 1993.5 with a stop at 1997.5 (4 dollars) and a target of 1985. It eventually dropped to 1982, and I manually closed at 1984 for a 9.5-dollar gain—0.4 lots made $380. I wait for this pattern only once a day; if it doesn't appear, I shut down the computer. No chasing breakouts, no guessing data, no touching NFP.
One Last Thing
Of those 1,000 trades, over 300 were losses, and my max drawdown reached 25%, but I never blew up an account again. Gold offers opportunities every day, but the ones that belong to me are just one or two. If you're trading gold too, don't think about doubling your account first. Nail your stop loss, calculate your position size correctly, and trade only the segment you understand. Leave the rest to time.