Michael Isaiah_ Adams#64

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What are global risk appetite indicators and how do they guide forex trades?

Risk appetite indicators measure investor willingness to take risk, shaping forex flows. Common proxies include VIX (equity volatility), credit spreads, commodity prices, and EM bond yields. For example, rising VIX signals risk-off sentiment, favoring USD, JPY, and CHF. Institutions combine multiple indicators into dashboards guiding allocation. Retail traders can track simple versions: watch VIX, gold, and S&P futures together. Benefits: aligning with sentiment reduces odds of trading against dominant flows. Risks: sentiment can flip quickly, especially during news shocks. Still, risk appetite indicators provide context, helping traders decide whether to chase carry trades or retreat to safety.