What Does Risk On Buying Or Selling Mean?
Risk on describes a situation when the market is in a positive mood. They are willing to take more risks therefore they tend to buy high beta currencies while selling safe haven currencies.
We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://bit.ly/2HFykNd
A very quick question from Mike. Mike is saying the terminologies that we sometimes use, saying risk on buying or risk on selling.
What exactly do we mean? Does it refer to buying or selling the actual pair?
So, Mike, looking at something like risk on and risk of buying or selling, it can basically refer to either a particular currency or a particular currency pair. So, these three pairs are normally the classic risk on, risk off movers. We've got the Aussie, the Kiwi and the CAD which is your high-beta, commodity-based currencies.
And then you have your Swiss Franc, as well your Japanese Yen, which is your traditional safe haven. So when we say that the Aussie, people is buying, there's risk on buying, for example, in the Aussie that can refer to only the Aussie dollar.
But seeing that it is paid here with the Swiss Franc, if we refer to it as a currency pair, you're saying that there's Aussie Swiss risk on buying, it means you'd be expecting market players to buy the Aussie and sell the Swiss Franc on the back of that risk on turn.
If we say that there is risk of selling, it can either refer to, again, the Aussie dollar, or the Kiwi Dollar, or the CAD themselves, or a pair such as the Aussie Swiss or Aussie Yen.
So, if we're saying, for example, in our dominant currency, saying the main theme for today, we see a risk of selling pressure in the Aussie Yen, it's because we're expecting players to sell the Aussie Dollar and buy the Japanese Yen, thus seeing risk of selling in terms of the Aussie Yen.
So, I hope that makes sense. If you want some more clarification on that please let us know.
If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it