Educational content. This article explains what risk-on and risk-off mean and how the mood shows up in forex, gold and index CFDs. It does not constitute investment advice or a recommendation. CFD trading carries significant risk of loss and may not be suitable for all investors.
Risk-on and risk-off describe whether investors are, on balance, buying or avoiding assets that can lose value. In risk-on, stock indices and high-yielding currencies such as the Australian dollar tend to rise. In risk-off, money moves toward the yen, the Swiss franc and government bonds, and often away from equities. The terms describe a market mood, not a signal.
This article defines the terms, lists which CFDs have usually sat on each side, shows the size of a 1% move per lot from the Vanto feed, and explains why several positions can be one bet. It does not predict any move.
What Does Risk-On Mean?
Risk-on means investors are willing to hold assets with uncertain returns because they expect compensation for the risk. Demand rises for equities, commodity-linked currencies, higher-yielding currencies and, in some periods, crypto. Volatility is usually low and falling, and the VIX, the index of expected US equity volatility, tends to sit at the low end of its range. The Vanto feed shows the VIX CFD at 17.03 on 10 October 2026, a single reading with no trend attached.
Risk-on is a description of flows, not of the economy. A rally can be broad, with indices, AUD/USD and NZD/USD rising together, or it can be narrow. The word "on" only says that the appetite for risk is the dominant influence for that period.
What Does Risk-Off Mean?
Risk-off means investors reduce exposure to assets that can lose value and move into assets seen as stable or liquid. Equities and high-yielding currencies are sold, volatility rises and demand grows for the yen, the Swiss franc, US Treasuries and sometimes gold. Selling is often forced rather than chosen: leveraged positions are closed because margin runs short, which pushes prices further in the same direction.
The speed is the difference from risk-on. Risk appetite builds slowly over weeks and unwinds in days, because the positions that were built patiently are closed at the same time. The mechanism is described in what a carry trade unwind is, which covers the August 2024 yen episode that the BIS Quarterly Review (September 2024) describes, when carry trades were unwound, the yen rose sharply and the VIX spiked.
Which CFDs Sit on Which Side?
A short answer: equity indices and commodity-linked currencies lean risk-on, while the yen and the Swiss franc lean risk-off. Gold and the US dollar are mixed. The table lists the direction each instrument has tended to move in a broad risk-off episode, with the reason. It is a description of past behaviour, not a guarantee for the next episode.
| Instrument | Class | Tendency in risk-off | Main reason |
|---|---|---|---|
| US500, US100 | Indices | Falls | Equity prices are sold directly |
| AUDUSD, NZDUSD | Forex | Falls | Commodity exposure and higher yields attract risk capital |
| USDJPY | Forex | Falls | The yen is a funding currency, and repaying yen loans means buying yen |
| USDCHF | Forex | Falls | The Swiss franc attracts haven demand |
| XAUUSD | Metals | Mixed, often rises | Haven demand against the dollar and real-yield effects |
| VIX | Indices | Rises | It measures expected equity volatility |
| BTCUSD | Crypto | Has often fallen | Treated by many holders as a risk asset |
Two cells need care. USDJPY and USDCHF fall in risk-off because the second currency strengthens, so a buyer of either pair is holding the risk-on side. Gold is not a clean haven: its behaviour depends on real yields and the dollar, as shown in why gold rises when real yields fall. For the yen's side of the story, see the USD/JPY guide and the USD/CHF guide.
Why Do the Dollar and the Yen Behave Differently?
The yen rises in risk-off mainly because it funds leveraged positions, while the dollar rises because the world borrows and holds it. A yen-funded trade is closed by buying yen, and a dollar-funded trade is closed by buying dollars, so both can strengthen at once. The four dollar channels are set out in why the US dollar rises when stocks fall, and the link between the yen and Japanese equities is covered in why Japanese stocks rise when the yen falls.
The two do not always agree. In April 2025, after the 2 April US tariff announcement, the dollar fell together with US stocks, a pattern the ECB's Financial Stability Review describes as unusual for a safe-haven currency. Treat the dollar column as "mixed" for that reason.
What Does a 1% Move Cost per Lot Across the Barometers?
A 1% move is worth very different amounts per lot, because contract size and price differ. The table is built from the Vanto feed snapshot of 10 October 2026. Notional value is contract size times price, in US dollars, and margin uses the maximum leverage of the class (forex 1:500, metals 1:500, indices 1:100, crypto 1:10). Contract sizes are described in what contract size is.
| Instrument | Contract size | Notional per 1 lot (USD) | Value of a 1% move per 1 lot (USD) | Margin at max leverage per 1 lot (USD) |
|---|---|---|---|---|
| USDJPY | 100,000 | 100,000.00 | 1,000.00 | 200.00 |
| USDCHF | 100,000 | 100,000.00 | 1,000.00 | 200.00 |
| AUDUSD | 100,000 | 69,851.00 | 698.51 | 139.70 |
| NZDUSD | 100,000 | 56,125.00 | 561.25 | 112.25 |
| XAUUSD | 100 | 419,438.00 | 4,194.38 | 838.88 |
| US500 | 1 | 7,820.77 | 78.21 | 78.21 |
| US100 | 1 | 30,917.60 | 309.18 | 309.18 |
| BTCUSD | 1 | 82,885.88 | 828.86 | 8,288.59 |
Source: Vanto feed snapshot, 10 October 2026. Prices change every second, so the table shows the arithmetic, not current values. For USDJPY and USDCHF the base currency is the dollar, so the notional is the contract size. USDJPY and USDCHF profits are earned in yen and francs and converted, so the 1% figure is approximate.
Two points follow. First, one lot of XAUUSD moves by about 4.2 times as many dollars per 1% as one lot of USDJPY, so "the same lot size" across instruments is not the same risk. Second, BTCUSD needs the most margin per lot because crypto leverage is capped at 1:10. Margin and lots are covered in what margin is and what is leverage.
Worked Example: Three Positions That Are One Bet
Positions in different instruments can be a single risk-on position. Take a trader who holds 0.1 lot long on each of AUDUSD, US500 and USDJPY, using the snapshot prices. The notional values are 0.1 times the table: USD 6,985.10, USD 782.08 and USD 10,000.00. All three sit on the risk-on side of the table.
Now assume an illustrative risk-off day with these moves, chosen to show arithmetic and not to forecast: AUDUSD falls 1.5%, US500 falls 2% and USDJPY falls 1%.
- AUDUSD: 6,985.10 x 1.5% = USD 104.78 loss
- US500: 782.08 x 2% = USD 15.64 loss
- USDJPY: 10,000.00 x 1% = USD 100.00 loss
- Total: about USD 220.42 loss
The three positions lose on the same day. Holding three instruments reduced nothing here, because the common driver was sentiment. The same arithmetic runs in the other direction in a risk-on period, which is why the framing must be balanced: leverage amplifies gains and losses alike. A related check is the stop-out level, since correlated losses reach it faster than independent ones. At Vanto the margin call level is 100% and the stop-out level is 50%.
Is There a Risk-On and Risk-Off Indicator?
There is no official risk-on indicator, but traders read several proxies together. The VIX is the most cited. Others include the direction of equity indices, the Swiss franc and yen against the dollar, the AUD/JPY cross and credit spreads. The VIX guide explains what the VIX measures.
The proxies describe the present mood. They do not tell how long it lasts, and each has its own noise: the VIX has a term structure, and AUD/JPY also reacts to Chinese data.
When Does the Risk-On and Risk-Off Pattern Break?
The pattern breaks whenever a shock hits one asset directly instead of the whole market. Four cases recur.
- The shock is local. A Bank of Japan decision can move USDJPY while the S&P 500 does not react, so a fall in the pair is not a risk-off signal.
- The safe asset is the source. In April 2025, per the dollar article, the dollar fell with stocks because the shock came from US policy.
- Correlations shift with the period. Two assets that moved together in one quarter may not in the next, so a relationship measured once is not a property.
- Weekend gaps. Sentiment can change while the market is closed, and a stop order fills at the next available price, not at the stop level.
The Vanto feed is a live snapshot with no history, so this article does not measure correlations over time. Any correlation figure needs a stated window, and one window does not apply to another.
Common Mistakes When Reading Market Sentiment
- Treating risk-off as a sell signal for equities or a buy signal for the yen. It is a description, not an instruction.
- Counting positions instead of drivers. Three risk-on positions are one exposure, as the example shows.
- Sizing by lots instead of by notional. One lot of gold is not one lot of the S&P 500, as the table shows.
- Ignoring costs in fast markets. Spreads tend to widen and slippage grows when sentiment turns, as described in what slippage is.
Frequently Asked Questions
Is the US dollar risk-on or risk-off?
The dollar is mixed. It has often risen when stocks fall because borrowers must repay in dollars, but it fell together with US stocks in April 2025. Treat it as a currency with several drivers, one of which is risk sentiment.
Is gold a risk-on or risk-off asset?
Gold has often risen in risk-off but is not a reliable haven. Its price depends on real yields and the dollar, so it can fall in a sell-off when investors raise cash. The relationship is explained in the real-yields article.
Why do AUD and NZD fall in risk-off?
AUD and NZD fall because they are higher-yielding currencies tied to commodities and global growth. When appetite for risk drops, capital leaves them for lower-risk currencies. AUDUSD and NZDUSD are therefore on the risk-on side of the table above.
Why does USD/JPY fall in risk-off?
USD/JPY falls because the yen has been a funding currency for leveraged trades. Closing those trades means buying yen, which pushes the yen up and the pair down. The move is a tendency, and a Japanese policy decision can override it.
Does risk-off always mean stocks fall?
No. Risk-off is a mood, and stocks can fall in a local sell-off without a global flight to safety. The term fits best when equities, volatility and the safe currencies all move in the expected directions at the same time.
How can I check my own exposure to risk sentiment?
List every open position and mark which side of the sentiment table it sits on, then add the notional values of each side. If one side dominates, the book carries one large bet. The trading calculator shows notional and margin per instrument.
Calculate the Numbers for Your Own Positions
Before relying on the figures above, check current notional value, margin and pip value for each instrument in the trading calculator. Prices move constantly, so the tables here show the method, and the calculator shows the present figures.
Risk warning. Trading securities, futures, options, and contracts for differences are complex financial instruments that require knowledge and understanding. Prices can fluctuate significantly and securities may become valueless. Investors may incur losses exceeding the potential for profits. Trading on margin can result in losses greater than the amount initially deposited. Past performance is not necessarily a guide to future performance. The information in this article is for educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. Consider whether CFD trading is appropriate for your circumstances and seek independent advice if necessary.