Risk On / Risk Off Meter

Risk On / Risk Off Meter

The Risk On / Risk Off Meter is your snapshot of global market mood — showing whether traders and investors around the world are taking on risk or playing it safe.

When the needle moves into the green zone, markets are in Risk On mode. That usually means confidence is high — stocks are rising, traders are buying growth assets, and currencies like the AUD or GBP are gaining strength.

When it drops into the red zone, it’s Risk Off. That’s when fear takes over — investors rush into safe havens like gold, the US dollar, or the Japanese yen, and riskier assets start to fall.

If it’s hovering around zero, the market is in a Neutral phase — neither confident nor fearful — often a calm before the next big move.

This simple gauge blends together multiple indicators from across equities, bonds, commodities, FX, and volatility to create a single Risk Score ranging from –100 to +100. It gives you an instant read on global sentiment — helping you stay aligned with the bigger picture before placing your next trade.

How to Use the Risk On / Risk Off Meter

The Risk On / Risk Off Meter gives you a quick visual snapshot of global market sentiment — showing whether traders around the world are taking on risk (“Risk On”) or avoiding it (“Risk Off”).
It’s designed to help you stay aligned with the broader market tone, filter trade ideas, and avoid fighting against global capital flows.

1. Understand the Score

The gauge displays a Risk Score between –100 and +100:

• +20 to +100 → Risk On: markets are confident, stocks and high-beta currencies usually rise, and safe-haven assets often weaken.
• –20 to –100 → Risk Off: investors are cautious, money moves into defensive assets (USD, JPY, gold, bonds).
• Between –20 and +20 → Neutral: markets are balanced, indecisive, or awaiting key data or central bank action.

Think of it as a market mood barometer — green means optimism, red means fear.

2. Align With the Market Mood

You can use the meter as a filter for directional trades:

• When the meter is Risk On, long setups on equities, growth-linked currencies (AUD, NZD, GBP), or commodities tend to align with the prevailing sentiment.
• When it’s Risk Off, defensive plays like USD, JPY, CHF, or shorting risk assets often perform better.
  This doesn’t mean you trade blindly — it’s about staying on the right side of market momentum.

3. Confirm Your Setups

Before entering a trade, glance at the meter:

• If your trade direction matches the Risk Score, it confirms broader market support.
• If it’s against the Risk Score, tighten risk or wait for a clearer signal.
  Traders often combine it with price action, trend indicators, or fundamental catalysts for confirmation.

4. Spot Market Shifts Early

Sharp moves in the Risk Score can hint at a shift in sentiment before price reacts fully.
For example, a sudden drop from +40 to –10 could suggest risk appetite fading — time to protect profits or reduce exposure.

5. Keep Perspective

The meter reflects global sentiment — not a single asset.
Always consider how your instrument (e.g., EUR/USD or S&P 500) typically behaves under each regime.
Over time, you’ll notice consistent patterns between the gauge and your favourite markets.

6. Update Frequency

The gauge is updated whenever the Risk Score is refreshed — look at the “Last Updated” timestamp below it to know how recent the reading is.
For active traders, a daily or intraday refresh provides the most useful snapshot of global mood.

Quick Summary

FAQs — Risk On / Risk Off Meter

1. What is the Risk On / Risk Off Meter? The Risk On / Risk Off Meter measures global investor sentiment — showing whether traders are confident and taking on risk (“Risk On”) or cautious and avoiding it (“Risk Off”). It combines signals from equities, bonds, commodities, currencies, and volatility into one simple Risk Score between –100 and +100.

2. How should I interpret the score? A score above +20 means markets are optimistic (Risk On). A score below –20 means markets are defensive (Risk Off). Scores between –20 and +20 indicate Neutral sentiment — a balanced or indecisive phase.

3. What happens when the meter is in Risk On mode? When markets are Risk On, traders typically buy stocks, commodities, and higher-yielding currencies like AUD, NZD, and GBP. Safe-haven assets such as USD, JPY, and gold often weaken.

4. What does Risk Off mean? Risk Off signals fear or uncertainty in global markets. Investors usually move capital into safer assets like the US dollar, Japanese yen, Swiss franc, and government bonds, while selling riskier assets such as equities or emerging-market currencies.

5. Can the Risk Meter predict market movements? It doesn’t predict price direction directly — it highlights market sentiment trends that often precede major moves. Traders use it as a confirmation tool or a macro filter to stay aligned with the overall market tone.

6. How often is the Risk Score updated? The score is updated manually or automatically depending on the data feed version. The “Last updated” timestamp below the gauge shows when the reading was last refreshed.

7. Should I trade only when it’s Risk On or Risk Off? Not necessarily. The meter works best as a context tool, not a trading signal on its own. Use it alongside your strategy — for example, to confirm bias, filter setups, or manage exposure during sentiment shifts.

8. Why does the gauge change colour? The colour reflects current sentiment: Green = Risk On, Grey = Neutral, Red = Risk Off. It helps traders instantly recognise the market’s tone without reading data tables.

9. What assets influence the Risk Meter? The meter blends data from the S&P 500 (equities), VIX (volatility), AUD/JPY (FX risk proxy), US yield curve (bonds), and Copper-Gold ratio (commodities) — offering a balanced view of global risk appetite.

10. How can I use it in my trading? Use the meter to stay in sync with market psychology. Trade with the prevailing risk tone (e.g. buy risk assets in Risk On). Tighten stops or reduce exposure when sentiment turns Risk Off. It’s a simple yet powerful way to combine macro awareness with your technical strategy.