XAUUSD EA Settings Explained: Lot Size, Stop Loss, Spread Filter, Trading Hours and More

Before you change anything

The setfile that ships with an EA is the author's starting point for a given symbol, timeframe and risk profile. Load it first, as described in our setfile guide, and attach the EA to the chart and timeframe named in the manual. Then save a copy of the untouched setfile so you can always go back.

Next, find out how your broker quotes gold. Right-click XAUUSD in Market Watch and open Specification. Note the contract size (usually 100 ounces), the digits (usually 2), the minimum lot, the lot step and the stops level. Many brokers add a suffix such as XAUUSD.m or GOLD, and some EAs need that exact name typed into an input.

Lot size and risk per trade

This is the input that decides whether a bad week is an annoyance or a disaster. Many gold EAs offer either a fixed lot or a risk percentage that works out the lot from the stop distance. A risk percentage is safer, because it adapts as the account changes and as the stop distance changes. Whatever you choose, check the money at risk for one losing trade.

The jump from 0.01 to 0.10 looks small on screen and is a tenfold change in risk. Many people aim to keep one trade near 1 percent of the account or less. On this account only the smallest lot sits near that level with a 10 dollar stop, which tells you something important: a small account either needs a smaller stop or is too small for that EA. The gold lot size calculator does this sum for any lot, stop and exchange rate, and how much money you need to run an EA works through it for several account sizes.

Stop loss, take profit and trailing

Prefer an EA that puts a hard stop loss on every position at the moment it opens the trade. A stop that is only managed by the EA's code disappears if the terminal disconnects. When an EA lets you change the stop, think about what gold normally does, not what looks neat. A stop that is smaller than the typical swing of a few minutes will be hit by noise, and a very wide stop turns every loss into a big one.

• Check the stop distance against the broker's minimum stops level and against the spread. A stop that is only a few times the spread loses a large share of each trade to costs.
• If the EA offers a trailing stop, test it. Trailing can improve some systems and ruin others, because gold often retraces before it continues.
• A fixed take profit is predictable. A variable one that depends on volatility needs more testing across different weeks.
• Leave the risk-to-reward ratio the author chose until you have a reason, and test any change on separate periods rather than the same one you used to choose it. Our overfitting guide explains why.

Spread filter and slippage

Gold's spread is not constant. It can be tight in the London morning, widen at the daily rollover, and jump during a news release. A maximum spread input tells the EA not to open a trade when the spread is above your limit. It is one of the most useful protections on any gold EA.

Choose the limit from your own broker's data. Watch the Spread column in Market Watch over a few days and note the normal range. Set the limit somewhat above the normal value but below the spikes. If you set it too tight the EA will sit idle, and if you set it too loose the filter does nothing. A useful test is to compare the spread to the EA's target: a 0.30 dollar spread against a 3 dollar target gives away a tenth of the move before the trade starts.

Slippage, often called deviation or maximum slippage, is how far from the requested price the EA will still accept a fill. Too tight and the broker rejects orders in fast markets. Too loose and you accept poor fills in exactly the moments that matter. Keep it near the value in the setfile, then compare real fills against the backtest after a few weeks of live trading. Our guide to spread, slippage and swap explains how each one hits a result.

Trading hours, server time and news

EA time inputs usually run on broker server time, not on your local time. Many MT5 brokers use a server clock of GMT+2 in winter and GMT+3 in summer, so that the daily candle closes with the New York close. Look at the time shown in Market Watch, compare it with the time in your country (for example Central European Time) and convert the EA's hours accordingly. Daylight saving changes do not happen on the same date in Europe and the United States, so for a couple of weeks a year the gap between your time and server time shifts.

• Use the session filter to avoid the daily rollover, when spreads widen and liquidity is thin.
• A news filter pauses trading around high-impact releases. If the EA has none, switch it off yourself before major events such as US inflation data, central bank decisions or employment reports.
• Check the Friday behaviour. An EA that holds positions over the weekend is exposed to a gap on Monday, and a close-before-weekend option removes that risk at the cost of some trades.
• Gold also reacts to European events and the euro, so expect extra movement around European Central Bank meetings.

Other inputs worth understanding

How to test a change safely

1. 1

   Step 1: Change one thing at a time

   If you change five inputs and the result is better, you do not know which one did it. Record the old and new value of each change.

2. 2

   Step 2: Backtest on real ticks with your broker's spread

   Use the Strategy Tester mode that is based on real ticks, as described in how to backtest an EA in MT5.

3. 3

   Step 3: Test a second, unseen period

   A setting that only works on the period you tuned it on is probably overfitted. Check it on a different year or a different month.

4. 4

   Step 4: Forward test on demo

   Run the new settings on a demo account for a few weeks, through at least one news week, before going live.

5. 5

   Step 5: Go live small

   Start with the minimum lot and compare real fills, spread and slippage with the demo.