Risk Appetite

Risk Appetite

Risk Appetite Brief

  • Risk Appetite – This is when the economy is doing good and persons are more willing to take risk
  • Risk Aversion – This is when the economy is not doing so well and as a result person are not willing to take as, much risk.
  • When there is risk appetite some traders will tend to invest in currencies with higher interest rates e.g. AUD. This because their central bank pays more interest. So you might see very good news for the USD as a result the AUDUSD rises.

Risk Appetite Described

Now this is where things can get a bit complicated. We say there is risk appetite. When the economy is doing good and persons are more willing to take risk. risk aversion is the opposite. This is when the economy’s not doing so well. And as a result, persons are not willing to take as much risk. Now, this is where it can get tricky. When there is risk appetite, some traders will tend to invest in currencies with higher interest rates. There’s for example, currencies like the Australian dollar or the New Zealand dollar and Because their central banks pays more interest.

So, you might see very good news for the USD and as a result the Aussie USD rises. Now this is not something that occurs very often, but there are several occasions where this has taken place. So, you have to be careful. If everything is going well and we are getting positive data and there’s more risk appetite, sometimes you will see a rise in the Aussie USD. Okay. But as I said before, this is not something that is very frequent, but it can’t happen. So, it’s something that you should know about. So, section recap.

First, always try to understand the cause or the potential cause of the move using the new sources. Use correlation to help you decipher the potential outcome of a fundamental known Smith. Remember, moves caused by time Changes in market sentiment are temporary. And once the fundamental picture is the same, the market should continue in the same direction. And the key that you should ensure that you remember is that anticipation is key, the market is mainly speculative. So, understand what the market is anticipating, and you will make lots and lots of money. So, in the next section we will be looking at the five major US fundamentals

Section Recap

  • First always try to understand the cause or the potential cause of the move using the news sources
  • Use correlation to help you decipher the potential outcome of fundamental, announcement
  • Remember moves cause by changes in market sentiments are temporary once the fundamental picture is the same the market should continue in the same direction
  • Anticipation is key the market is mainly speculative understand what the market is anticipating and you will make money.

Next Article After Risk Appetite

 

Use These Site to Get Fundamental Data

  1. Investopia
  2. Bloomberg
  3. FXstreet
  4. Ransquawk
  5. forexfactory

 

 

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