Module 1: How commodity trading works · Lesson 2 of 9

Contract sizes and tick values

3 min read

A contract size tells you how much of a commodity one lot represents, and the tick value tells you how much money you make or lose for each smallest price step. Knowing both lets you work out your profit or loss before you trade.

Gold: ounces per lot

Gold is priced per troy ounce, a unit of weight used for precious metals (about 31.1 grams). For XAU/USD, one standard lot is commonly 100 troy ounces, but always check your broker's contract specs, because some brokers use different sizes.

With 100 ounces per lot:

A 1-dollar move in the gold price equals 100 dollars per lot.
Gold is usually quoted to two decimal places, so the smallest step is 0.01. On one lot, a 0.01 move is worth 1 dollar.
A 0.10 lot (10 ounces) makes or loses 10 dollars per 1-dollar move.

Example: You buy 0.5 lots of XAU/USD at 2,000.00. That is 50 ounces. The price rises to 2,012.50, a move of 12.50 dollars. Your profit before costs is 12.50 x 50 = 625 dollars. Had the price dropped by the same amount, you would have lost 625 dollars. These prices are for illustration only.

Oil: barrels per lot

Oil is priced in US dollars per barrel. Contract sizes vary a lot between brokers: one lot might be 1,000 barrels at one firm and 100 or even 10 barrels at another.

Lot size	Value of a 0.01 move	Value of a 1-dollar move
1,000 barrels	10 dollars	1,000 dollars
100 barrels	1 dollar	100 dollars
10 barrels	0.10 dollars	10 dollars

Example: With a 1,000-barrel lot, a 0.3-lot position is 300 barrels. If oil moves from 80.00 to 78.50, a short position gains 1.50 x 300 = 450 dollars, while a long position loses the same amount.

Why this matters for risk

Before placing a trade, multiply the distance to your stop-loss by the value per point of your position. That gives the amount you could lose if the stop is hit (gaps aside). If that number is too large, reduce the size.

Key takeaways

XAU/USD is commonly 100 troy ounces per lot, but check your broker's contract specs.
On a 100-ounce lot, each 1-dollar move is worth 100 dollars.
Oil lot sizes vary widely between brokers, so tick values vary too.
Use contract size and stop distance to calculate your risk before trading.

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Educational content only — not investment advice. Leveraged trading carries a high risk of loss.