Trade of the week: stand aside
Following last week's successful short Nasdaq 100 trade, we would like to stand aside and not put risk on this week, the reason being that markets have entered a dangerous, highly volatile firesale situation.
(Video Transcript)
This week's trading advice
Axel Rudolph: Hello and welcome to this week's "Trade of the week" on Monday, the 7th of April 2025. Now, I had a lot of questions about last week's "Trade of the week". Basically, it was to go short the Nasdaq 100, and, we basically hit my long-term target within days, which nobody had forecast, not even me. And, basically, for this week's "Trade of the week", I'm not going to trade. I'm not going to put up a trade today.
And do you know why? Because sometimes it's best just not to do anything; to batten down the hatches, to reduce your risk and to see what happens. Because basically at the moment we have a lot of volatility. It's fierce. I'm not saying it is, but it feels very much like a scenario where we could see hedge funds having to, basically get out of positions at any costs, having to sell their equity holdings at any level, having to sell other asset classes also just to cover the margin calls.
This is why, for example, the spot gold price also came down last week, at the end of last week. And also now finally Bitcoin coming off. So, basically investors have to sell some assets which hadn't fallen before in order to cover the margin calls. So when times like these are happening, when the volatility is very, very high, and also quite frankly, when the macroeconomic picture is very, very confused. And confusing still with all these comments by US President Trump etcetera., it's quite often best not to do anything - just to reduce your risk, reduce your trading size. Make sure you adhere to your stop losses. Don't try to hope that you will see a bounce, etcetera. Just get out of your position.
Previous trading outcomes
Now, with regards to last week's position, it already hit my target. We went short the Nasdaq 100 at 19,100. We had a downside target 16,500. That was hit, or is probably going to be hit again earlier this morning. So, perhaps it's time to get out. If you believe this is the beginning of a major bear market, because it may well be, then obviously you stay short with that position, but perhaps lower your, stop loss level to now a take profit level. So just below your entry level. So, you've got basically a free trade on.
So, this is this week's "Trade of the week", it is to just sit on the side-lines, wait and see what happens and to not trade because, sometimes, that's best.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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