Trade of the week: average hypothetical +19% gain over past six years
Since 2019 IG's analysts achieved an average hypothetical yearly return of +19% by risking 2% of capital per trade, always using stop losses, cutting losses short and letting profits run.
(Partial video transcript)
A six year review of Trade of the week
Axel Rudolph: Hello and welcome to this week's "Trade of the week" on Monday the 30th of December, 2024. Since we haven't got any trades on, I wanted to go through the stats over the last six years and show you what we've been up to with regards to "Trade of the week". And let's begin with the last year's performance; the 2024 performance. And you can see here that we made a hypothetical profit of 31.45%, risking only 2% of capital.
I showed you this last week so we're not going to go back into that in any detail, but you can see here that we had nine neutral trades on, so we got stopped at our break-even point, and we had 21 winning trades and 20 losing trades. So on average, we're right about 50% of the time. You can see here that on a monthly basis, we had four months of losing trades and we had eight months of winning trades, but only four of these being really proper winning trades.
Average 19% gain over the last six years
But what is far more important is to focus on your average winners and losers. And can you see here on this chart, I showed you basically last week already all the maximum losses we had, and I'm doing so again this time around. So we're risking 2% of capital. You can see here every time we lose on a trade, we truncate the downside, but we let our profits run.
So you can see on average our profits were 1.62 times larger than our losses in 2024. And that's how we ended up making over 31% return. Now if you look at the performance over a multi-year period, you can see here that with regards to "Trade of the week", on average, we made a 19% positive return per year. Now I'm only responsible for the last two years of those. And in 2023, we made 22.67%. And then this year, as I said, 31.45%. But you can see that the average is at plus 19% and that we were positive in every single year, including the Covid pandemic year, and you can see here that as well.
And if we look at the stats for all the trades, again, you can see that we are extremely disciplined with regards to our downside and we never risk more than 2% of capital. So we can see here that we cut short our losses and let our profits run. And that's why we made this average 19% gain over the last six years.
So you can see with regards to trade of the week that if you want to be profitable on a year-to-year basis, what you need to do is make sure that you cut short your losses and let your profits run.
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. See full non-independent research disclaimer and quarterly summary.
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