If you are even slightly familiar with the currency market, you have probably heard the phrase “the market is in risk-on mode” or, conversely, “everyone is going risk-off today.” It sounds almost like a code word for professionals, but in reality, the logic is quite simple: it’s about investor sentiment.
Risk-On: When the Market Has an Appetite for Risk
For intraday trading and scalping, this is not a “must-have tool,” but for comfort and long-term vision protection, blue light filters (built into the screen or glasses) are a good addition to a properly selected color theme for charts. This is called risk-on mode when money actively flows into more profitable but risky assets.
What this means in practice:
- stocks and stocks indices are rising;
- oil, copper, and other commodities are becoming more expensive;
- so-called “risky currencies” (AUD, NZD, and CAD) are winning in the currency market.
Let’s note that:
AUD (Australian dollar) — tied to commodities and China;
NZD (New Zealand dollar) — also sensitive to global trade;
CAD (Canadian dollar) — often correlates with oil.
Risk-Off: When Investors Flee to a “Safe Haven”
Now imagine the opposite situation: the global economy is slowing down, geopolitical conflict is flaring up, trade wars are breaking out, and the global central banks (Fed, ECB, BoE, BoJ) are changing their monetary policy. During such periods, investors close risky positions and flee to where they believe their money will be safe. This is risk-off mode.
Where does capital flow at such times?
- Gold and US government bonds (treasuries) begin to be in demand.
- On Forex, “safe haven currencies” strengthen (USD, CHF, and JPY).
Let’s note that:
USD (US dollar) — global reserve currency;
CHF (Swiss franc) — considered a reliable asset in Europe;
JPY (Japanese yen) — traditional “protection” in times of turbulence.
How It Looks on the Charts?
Example:
Timeline:
- 26.03.2025. Trump announces the imminent introduction of tariffs, essentially returning to the trade wars of his first term as president. Investors begin to sell off stocks, leading to a decline in stock indices, including the Nasdaq 100 (US100) Technology Index. This marks the beginning of “risk-off,” when investors no longer want to take risks.
- 02.04.2025. Trump announces the size of the tariffs and the date when they will come into effect. “Risk-off” mode increases, and a massive sell-off begins among investors and hedge funds that want to avoid risk.
- 09.04.2025. Trump announces a 90-day tariff moratorium. Investors and funds switch to “risk-on” mode and buy up fallen stocks, leading to a sharp rise in stock indices.
Cheat Sheet: Risk-On/Risk-Off Mode
| Market Regime | What Happens | Benefiting Symbols | Underperforming Symbols |
| Risk-On (Appetite for Risk) | Investors move into equities, commodities, and higher-yielding assets | AUD, NZD, CAD (commodity currencies), EUR, GBP, stock indices |
USD, JPY, CHF (safe-haven currencies) |
| Risk-Off (Risk Aversion) | Capital flows into safe-haven assets, demand rises for bonds and gold | USD, JPY, CHF (safe-haven currencies) Gold, Silver |
AUD, NZD, CAD (risk-sensitive currencies), EUR, GBP, stock indices |
Risk-on / risk-off is essentially a barometer of overall investor sentiment. For traders, it is not merely a theoretical concept, but a practical tool that helps interpret market behavior and understand why certain assets move the way they do at specific times. Importantly, during pronounced shifts between risk-on and risk-off regimes, traditional technical analysis often loses its effectiveness. Relying solely on chart patterns while ignoring broader macroeconomic and geopolitical developments significantly reduces the likelihood of maintaining consistent profitability in the market.