Trade of the week 2024: how disciplined risk management delivered a 31.45% return
IG's weekly trade ideas achieved 31.45% hypothetical gains in 2024, demonstrating the importance of careful position sizing and risk management.
Trading success often hinges more on risk management than on win rate, as demonstrated by IG's ‘Trade of the Week' (TOTW) performance in 2024 and over the past six years.
Understanding the ‘Trade of the week’ concept
IG Senior Technical Analyst Axel Rudolph, Fellow of the Society of Technical Analysts (FSTA), provides weekly hypothetical trade setups every Monday morning in his ‘Talking Technicals’ TV slot on ‘Trade Live with IG’, starting on Monday 6 January 2025.
These educational trade ideas demonstrate proper position sizing, stop-loss placement, and risk management techniques. The trade ideas are accessible via IG's website (‘News and Trade Ideas’ section), MyIG platform, and IG UK YouTube channel.
Risk management principles in action
The success of TOTW is built on enforcing a strict 2% risk limit per trade, preventing large drawdowns.
In July 2024, four consecutive losses resulted in only an 8% drawdown, which required a 9% gain to recover. If the risk per trade had been 10%, it would have required a 67% recovery gain, underscoring the crucial importance of risk control.
2024 performance analysis
IG’s TOTW setups achieved strong monthly gains of approximately 11% to 12% in January, June, and November, compared to the worst monthly loss of 6.32% in July 2024.
Out of the 50 total trades, 21 were profitable, 20 were unprofitable, and 9 broke even after stop-loss adjustments.
2024 TOTW monthly profit & loss chart
Eight months ended in profit, with four showing marginal gains and four recording losses.
Importantly the average winning trade of £362.84 (A$ 689.81) was 1.62 times larger than the average loss of £223.72 (A$425.07).
2024 TOTW return per trade chart
Key success factors
- Each trade risks no more than 2% of a $20,000 demo account, plus spread costs
- Disciplined position sizing limited losses to 2% per trade
- Stop-loss orders were adjusted to breakeven when a 2% profit was achieved
- The strategy's success was driven by trades where the average wins outpaced losses, with some profits reaching 10%.
Six years of hypothetical profits
Since inception in 2019, the same risk and money management discipline has been applied in TOTW, with an average annual hypothetical gain of 19%. This significantly outperformed the FTSE 100, FTSE 250 and United Kingdom (UK) government bonds (Gilts).
2019 - 2024 TOTW yearly profit and loss chart
Implementing these principles
- Open a demo account to practice risk management
- Risk no more than 2% of trading capital per trade
- Employ proper position sizing and stop-losses
- Follow weekly trade ideas and analyse results
- Maintain detailed records of trading performance.
These results demonstrate that disciplined risk management is essential for consistent profitability, even during challenging periods like the Covid-19 pandemic.
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Trade of the week 2024: how disciplined risk management delivered a 31.45% return
IG's weekly trade ideas achieved 31.45% hypothetical gains in 2024, demonstrating the importance of careful position sizing and risk management. -
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