Gate TradFi Income Guide: Achieve Steady Returns and Risk Control with Gold XAU

Gold spot XAU prices recently hit a 52-week high, reaching $4,835.69, with a gain of over 75% in the past year. In highly volatile markets, Gate’s TradFi products offer investors a unique choice that combines the principles of traditional financial markets with the efficiency of crypto trading.

01 Gate’s TradFi World

TradFi is short for “Traditional Finance.” In the context of cryptocurrency exchanges, it specifically refers to innovative services that introduce mature assets and trading strategies from traditional financial markets into digital asset platforms.

As one of the world’s leading cryptocurrency exchanges, Gate’s TradFi services are not simply tokenizations of stocks or commodities, but rather an ecosystem that integrates the advantages of both financial worlds.

This system allows users to directly access traditional assets such as forex and precious metals within a familiar crypto trading interface, and to manage them using modern tools like copy trading and automation strategies.

The Gate platform offers trading channels for over 3,500 cryptocurrencies, and on this foundation, it has integrated TradFi assets to form a comprehensive service matrix including spot, futures, margin trading, and various wealth management products.

It operates legally in multiple major jurisdictions worldwide, such as Malta, Dubai, and Lithuania, providing support for the compliant operation of its TradFi business.

02 Core of Returns: Detailed Explanation of the High Watermark Principle

TradFi products, especially profit-sharing from copy trading, are fundamentally based on a key financial concept—the high watermark.

This not only serves as a performance benchmark but also ensures that the interests of traders and investors are aligned through a carefully designed mechanism.

The high watermark is a dynamically updated record of the highest net asset value (NAV) historically achieved. Its operational rule is: performance fees are only paid on the excess profits when the current total return of the portfolio (realized gains plus unrealized floating P&L) exceeds the previous high watermark.

If a trade results in a loss, causing the cumulative return to fall below the high watermark, the trader must first recover all losses to push the net value above the previous high before earning any performance fee again.

This mechanism effectively prevents traders from taking excessive risks chasing short-term gains, as any losses must be first offset by their own efforts. It ensures that top traders are rewarded only when they continuously generate new profits for followers, creating a deep alignment of interests.

Rules and Formula

Gate’s TradFi profit-sharing calculations follow clear cycles and formulas. Profit calculations are typically weekly, with profit settlements scheduled mostly on Sundays.

The specific calculation method is as follows:

Profit Available for Sharing = (Cumulative Realized Gains + Current Unrealized P&L) - Current High Watermark

Actual Profit Share = Profit Available for Sharing × Agreed Profit-Sharing Ratio

The profit-sharing ratio is set by the trader, usually between 10% and 30%, directly reflecting their professional capability.

03 XAU Trading Practical: Profit Calculation Demonstration

Understanding the principle, let’s take the recently popular gold spot XAU as an example for a realistic profit projection.

Suppose a TradFi trader on the Gate platform focuses on XAU/USD trading, with a 20% profit-sharing ratio. The initial net value and high watermark of their account are both $10,000.

Note: The following XAU/USD price data is based on market conditions around January 21, 2026.

Week 1: The trader buys when XAU/USD is around $4,760. Later, as the price rises, they close near $4,820.

Realized profit: (4,820 - 4,760) × position size. For simplicity, assume a profit of $1,000. At this point, cumulative gains are $1,000, and the high watermark updates from 0 to $1,000. Profit available for sharing this week: $1,000.

Week 2: The market pulls back, and the trader makes a misjudgment resulting in a $200 loss.

Cumulative gains drop to $800. Since $800 < $1,000 (current high watermark), no profit share is earned this week, and the high watermark remains at $1,000.

Week 3: The trader re-enters with a long position on XAU. By the weekend, floating profit is $400.

Cumulative gains = $800 (realized) + $400 (floating) = $1,200.

Profit over high watermark: $1,200 - $1,000 = $200. This becomes the new profit available for sharing, and the high watermark updates to $1,200.

This simplified example shows that profit calculation is strict and transparent, entirely dependent on the trader’s ability to create new highs for the fund.

04 Building Your Risk Control System: From Concept to Tools

High returns inevitably come with high risks, especially in assets like gold influenced by macroeconomic factors, geopolitical events, and monetary policies. Establishing a disciplined risk control system is the foundation for long-term survival.

Core Risk Control Principles

• Single Trade Risk Limit: This is the first line of defense. It is recommended to strictly limit the maximum potential loss of any single trade to 1% to 2% of total trading capital. This ensures that even after multiple consecutive losses, sufficient capital remains to continue trading.
• Set Clear Stop-Losses: “Never hold a position without a stop-loss” is a fundamental rule. Based on technical analysis or your maximum tolerable loss, set automatic stop-loss orders at the time of opening a position.
• Diversification: Avoid putting all funds into a single asset or strategy. In TradFi, consider allocating across different types of traditional assets.

Using Gate Platform Tools

In addition to personal principles, leveraging Gate’s tools can greatly enhance risk management:

• Stop-Loss/Take-Profit Orders: Whether spot or futures, you can set conditional orders at opening or during holding to automate risk control.
• Demo Account: Before risking real funds, it’s highly recommended to use Gate’s demo account for strategy testing and practice. This helps you familiarize yourself with the platform and refine strategies in a zero-risk environment.
• Copy Trading Risk Parameters: As a copy trader, Gate’s copy system allows you to set per-copy ratios, maximum position sizes, and total loss limits. Be sure to utilize these features to implement secondary risk control from the capital side.

05 Advanced Perspectives on TradFi Strategies

After mastering basic risk-reward calculations, you can explore more efficient strategies to optimize your Gate TradFi investment experience.

Using trend and volatility: Assets like XAU often exhibit trending behavior. Combining basic indicators like moving averages to identify main trend directions can significantly improve win rates. Gold also has high volatility, providing opportunities for short-term traders.

Multi-asset portfolios: Don’t limit yourself to gold. Gate’s TradFi products may include various forex pairs, stock indices, etc. Building a low-correlation asset portfolio can effectively smooth overall asset curve fluctuations without sacrificing expected returns.

Hedging with crypto markets: Cryptocurrencies and traditional assets sometimes move asynchronously. Studying the correlation changes between BTC, ETH, and XAU may reveal unique cross-market hedging or arbitrage opportunities. This is a distinctive perspective offered by comprehensive exchanges like Gate.

Regardless of the strategy chosen, disciplined execution and continuous review are always key to distinguishing ordinary traders from successful ones.

Future Outlook

When the XAU price on the Gate platform hits a new high of $4,835.69, its 52-week volatility range reveals potential market risks and opportunities.

For investors, true safety margins do not come from betting on a single direction but from a thorough understanding of TradFi return mechanisms and disciplined risk controls such as setting a 1% to 2% limit on single trade losses.