What is risk sentiment?
Risk Sentiment, Fear or Greed!
Risk sentiment is an indicator that is used to describe how financial market traders feeling about Risk.
Traders When informed about the political issues between some countries, military stimulus, or some global Challenges like coronavirus crisis, They feeling risk on the market and start buying safe-haven assets. like JPY, CHF, USD. We call this situation "RISK-OFF" market.
On other hand is that, market traders feeling good for buying risky assets, like NZD,AUD,CAD or stocks markets too. We call this situation "RISK-ON" market.
We use this indicator to select our watchlist pairs, or even care about which pair we buy or sell.
Risk OFF:When the market is “seeking safety”, it is considered a “risk off” environment.They rotate their capital into safe haven assets. “Risk-Off” mood refers to traders’ reluctance to make riskier trades. When traders become “risk averse”, they tend to take two actions:
RISK-OFF sentiment, traders selling/Exit risky assets for buying safe-haven assets to reduce their basket risk.
Risk ON:When the market is “seeking risk”, it is considered a “risk on” environment. A risk on mood refers to traders’ willingness to make riskier trades.
In a “risk on” environment, traders and investors feel more confident and will seek higher returns by buying “risky assets” and selling”safe haven” assets. They rotate their capital into risky assets.
indeed, in RISK-ON sentiment, traders selling their safe-haven pairs FOR buying risky assets to have more profit gain.
We analyze all tha market price from starting the forex sessions (Sydney, Tokyo, London and New York) to indicate Fear and Greed sentiment.
Bellow you can see safe-haven currencies versus high beta currencies and this is one of the most reliable method is commonly used by FX trading departments of banks. We have implemented artificial intelligence (A.I.) to monitor market move in purpose for market risk sentiment detection. The A.I. shows us risk-on or risk-off in the market.