The short answer
- Press Buy if you think gold will go up. You make money if it rises, and lose if it falls.
- Press Sell if you think gold will go down. You make money if it falls, and lose if it rises.
- Either way, you close the trade later with the opposite action. Your profit or loss is the difference between the two prices, times your size.
That’s it. The rest of this page explains it with a shop, so it sticks.
The shop: buying first (going long)
Imagine you run a small shop that sells gold.
- Monday: you buy 10 ounces of gold from a supplier at $4,000 an ounce.
- Friday: the price is $4,010. You sell the 10 ounces to a customer.
- You made $10 per ounce × 10 ounces = $100.
In trading, that’s exactly a Buy trade:
Example (checked by script): buy 0.10 lot of XAUUSD (0.10 lot is usually 10 ounces) at $4,000, close at $4,010: profit = 0.10 × 100 × $10 = $100, before costs.
If gold had fallen to $3,992 instead and you closed there, you’d lose 0.10 × 100 × $8 = $80.
Traders call a Buy trade “going long” or being “long”. See the glossary: long and short.
The shop: selling first (going short)
Now the part that confuses everyone: how can you sell something you don’t have?
Imagine a customer walks into your shop on Monday and says: “I want 10 ounces, and I’ll pay $4,000 each now. Deliver by Friday.”
- You take the order at $4,000 (you’ve sold first).
- By Thursday the price has fallen to $3,990. You buy 10 ounces from your supplier at that price and deliver them.
- You made $10 per ounce × 10 ounces = $100.
You sold first and bought later. Because the price fell in between, you made money.
In trading, that’s a Sell trade (going short):
Example (checked by script): sell 0.10 lot at $4,000, close (buy back) at $3,990: profit = 0.10 × 100 × $10 = $100, before costs.
If gold had risen to $4,010 instead, you’d have had to buy back higher, losing $100.
When you trade XAUUSD as a CFD, you never actually hold or deliver gold. You trade a contract on the price, so selling first is just as easy as buying first. Our full guide how to short gold goes deeper, including the risks.
One picture in words
| You press first | You think gold will | You make money if gold | You lose if gold | You close with |
|---|---|---|---|---|
| Buy (long) | go up | rises | falls | Sell (or “Close”) |
| Sell (short) | go down | falls | rises | Buy (or “Close”) |
On MT5 and most apps, you don’t have to press the opposite button yourself. You just press Close on the open trade, and the platform does the opposite action for you.
The shop’s two prices: why Buy costs more than Sell
Every real shop buys a little cheaper than it sells. That’s how it earns.
Your trading app is the same. It shows two prices:
- Sell price (bid): what you get if you sell. Slightly lower.
- Buy price (ask): what you pay if you buy. Slightly higher.
The gap is the spread. It’s a cost on every trade.
Example (checked by script): if the spread is $0.30, a 0.10 lot trade starts $3 down (0.10 × 100 × $0.30) the moment you open it. Gold has to move $0.30 your way just for you to break even.
More: gold bid and ask price explained and spreads, commissions and swaps on gold.
How big is “one shop order”? Lots
Your trade size is measured in lots. On most gold accounts:
- 1 lot = 100 ounces: $1 move = $100
- 0.10 lot = 10 ounces: $1 move = $10
- 0.01 lot = 1 ounce: $1 move = $1
So 0.01 lot and a $10 move is a $10 profit or loss. Check your own broker’s contract size, because some use different sizes. See how much is 1 lot of gold?
The part shops don’t have: leverage
A real shop pays the full price for its gold. In trading you usually don’t. With leverage, a small deposit (margin) lets you control a big position.
That makes gains and losses bigger compared with your money. On a $1,000 account, a 0.10 lot trade moves your balance $100 for every $10 gold moves. That’s 10% of the account. Read gold leverage explained and balance, equity and margin before trading real money.
What happens when you’re wrong
Being wrong is normal. Every trader is wrong often. What matters is how much you lose when you’re wrong.
- A stop-loss closes your trade automatically at a price you choose, so one bad trade can’t grow into a disaster.
- Without one, a short can keep losing while gold rises, and a long can keep losing while it falls. See what happens when you trade without a stop loss.
Common beginner mix-ups
- “I pressed Sell to close my Buy, and now I have two trades.” On a hedging account, Sell opens a new short instead of closing. Use Close on the original trade. See hedging vs netting.
- “My Sell trade is already losing.” That’s the spread. You sold at the lower price; the chart line you see is usually the bid.
- “I can only make money when gold goes up.” No: Sell lets you profit from falls, with the same risks in reverse.
- “Shorting is more dangerous.” Both directions carry risk. Size and stops matter more than direction.
Try it on a demo
The best way to understand Buy and Sell is to do it with fake money. Open a demo account, place one tiny Buy and one tiny Sell, and watch the profit change as the price moves. Then use the gold profit calculator to check the numbers.
Where next
You’re in stage 2 of the Gold Trader’s Journey. Next: charts for absolute beginners: one candle and one timeframe.
Educational content only, not financial advice. Examples are labelled and checked by script. Trading gold with leverage carries a high risk of loss.
Frequently asked questions
How do you make money when gold goes down?
You press Sell first (this is called going short) and Buy later to close. If gold falls between those two moments, the difference is your profit. For example, selling 0.10 lot at $4,000 and buying back at $3,990 makes $100 before costs.
What does Buy mean in gold trading?
Pressing Buy opens a long position: you profit if gold’s price rises and lose if it falls. You close it later by selling. On most platforms, closing is one button, so you don’t need to press Sell yourself.
Do I need to own gold to sell it?
No. When you trade XAUUSD as a CFD, you trade a contract on the price, not physical gold. That’s why you can sell first and buy back later.
Why are there two prices, Buy and Sell?
The Sell price (bid) is lower than the Buy price (ask). The gap is the spread, which is a cost you pay on every trade, like a shop that buys from you a little cheaper than it sells.
Can I lose more than I put in when I sell?
Losses on a short grow as gold rises, just as losses on a long grow as it falls. A stop-loss limits them. Some brokers offer negative balance protection, which stops your account going below zero, but check your own broker’s terms.
Sources and further reading
- CME Group — Gold futures overview — Contract specifications and trading hours for COMEX gold
- CFTC — Commitments of Traders — Weekly futures positioning, including gold
- Investor.gov — Stop order — How stop orders work, and their limits in fast markets
External sites are independent of XAUUSD Global. Check dates and data yourself.
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