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Ask Your Advocate:What are "risk-on" and "risk-off trades?

23 Years ago | January 26, 2014 1/28/23, 12:00 AM

Question for the Advocate:

I keep hearing about “risk-on and “risk-off” trades in times of heavy market volatility. Can you explain risk on and risk-off trades, and how they work?



John M. BlandYour Advocate Says:

Risk trades (or sometimes investments Zi re “high beta” transactions that can be positively correlated with bull markets.  “Risk trades” can be selected speculative stocks, many commodities or in currencies such as the CHF, AUD, CAD and others. At times gold can be a speculative risk trade, but at other times gold can be a safe-haven,. The opposite of a risk trade is a safe haven trade. These include treasury bills, high quality government bonds, the USD, EUR and other low beta instruments.


When markets are performing well, money tends to higher risk investments (risk on), but in times of market uncertainty investors tend to move their funds to safer havens, such as U.S. or other higher quality government debt, cash, and sometimes physical gold.  As a trader, often you will see telltale signs of risk-off behavior before you know the reason why. There is a sixth sense we all develop over time as traders when things don’t feel right. This is a sixth sense that it pays for all serious traders to develop.      

 Feel free to contact me with any comments and to submit your Ask the Advocate questions at


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