Commodities Risk Management: Handling the Volatility of Gold, Silver, and Oil

Commodities are among the most volatile instruments in financial markets. Here's a complete risk framework: **Daily ATR reference (volatility baseline):** - Gold (XAUUSD): ATR ~$22/day. Stop = minimum 1× ATR = $22. - Silver (XAGUSD): ATR ~$0.60/day. Stop = minimum $0.60. - WTI Crude: ATR ~$1.50/barrel. Stop = minimum $1.50. Always calibrate position size to ATR, not to arbitrary pip values. **News event protocol:** CPI, FOMC, NFP, OPEC meetings — all create 2–4× normal volatility spikes in commodities. Rule: half your normal size going into these events. **The correlation trap:** If you're long gold AND short USD (via EUR/USD long), you're effectively doubling your anti-USD exposure. **Maximum commodity portfolio allocation:** For most retail traders, commodities should be max 25–30% of total trading capital at any one time. **Overnight positions:** Commodities, especially gold, gap on weekends with geopolitical news. Limit weekend gold/silver exposure to half your normal size. What's your commodity-specific risk rule that you never compromise on?