Trade of the week: long S&P 500

(Partial video transcript)

Previous trading outcomes

Axel Rudolph: Hello and welcome to this week's "Trade of the week" on Monday the 20th January, 2025. I've got a lot to cover today, so let's get straight in and at the beginning of the year, you might remember, we went long the Tesla share price. And you can see the daily chart of that Tesla trade on here. And we nearly got stopped out. We were underwater for quite a few days, as you can see here. But we didn't hit our stop level, which was just below the early January low. And since then we are back in profit. So, if you are a more cautious trader, maybe you can raise your stop level to your entry level. Thereby you have a free trade on and, if the Tesla share price continues to rise, then you're fine, but you may get stopped out. It's really up to you.

But what I wanted to mention is some of our viewers basically said that they wanted me to cover stocks as well. And some viewers pointed out, well, on this trade with £1.00 per point, you would have had a initial risk, basically, of about £4,500.00. So obviously, with our hypothetical £10,000.00 trading account, you can't do that. You can't risk 45% of your capital on one trade. So just to be very clear about "Trade of the week", it is educational. I'm showing you patterns. I'm showing you setups. How to manage your trade with regards to stop-loss placement and target levels and things like that.

It's not a copy trade system. So we now cover also individual stocks because we've got some viewers who have much bigger accounts. And for the Tesla trade, you probably need one of about £300,000.00 as a deposit to be able to trade that sort of setup. But the patterns are the same. So if we go back on the chart, I can show you. Can you see the same pattern here? This ABC correction worked a treat this morning on a five minute DAX 40 chart. And it had a risk-to-reward ratio of about 3 to 4 to 1. So we'll look at that in more detail in a few minutes. But basically, the Tesla trade is still on and it should continue to rise.

Hopefully we'll see. For now, for the time being, we just keep our stop-loss below the early January low. Now last week's trade, we went short the oil price against this major resistance area here and we did so around $77.10 I believe. And it did look good at the beginning, but then we got stopped out. And this happens. It's really frustrating because now we're back down below our entry level where we went short, but we got stopped out. Would I use a wider stop? No, I wouldn't because on average then your trades have wider stops, wider losses and that's not what you want to do. So you want to always respect your stop-losses, even if sometimes you get stopped out and then the trade actually works out. It's just part of trading.

This week's trading opportunity

But let's look at our "Trade of the week" and we can see that today, what I would like to do, even though the US markets are shut, you can spread bet the S&P 500. And you can see that we bounced off major support. We broke through a downtrend line. We closed above it on Friday. All of this is very bullish. Do I want to buy it up here with the US markets being shut and the Trump inauguration? Probably not just now, but maybe because of President, as of today, later on today, President Trump, probably signing around 100 decrees, we could see a lot of volatility tomorrow.

And, therefore, I would like to go long the S&P 500 at a slightly lower level on a retracement around 5,963 with a stop-loss below the 13th January low at around 5,771 and an upside target around 450 points away or so. So we have a good risk-to-reward setup. So today's "Trade of the week" is to buy, or go long, the S&P 500 on a minor retracement towards 5,963 on IG's Daily Financial Bet (DFB), with a stop-loss below 5,770 and an upside target around 6,463.