Originally posted at forexfactory on August 7, 2010
Originally Posted by ShpokasBut Risk appetite and Risk Aversion is only seen when the market does some kind of moves? i.e. AUD falls and that means that it is off? Do I getting it right? Or the Risk appetite is calculated is some other ways and could be predicted to be valuable in trading? Because in the first look it seems like Eliot waves are driven by something very similar.
NZD fell on August 5th, but the rest of the commodity currencies, as well as EUR, GBP, and equity markets held up pretty well. There was some risk appetite on that day, but the NZD still made a 100 pip correction anyways.
I don’t know how to calculate risk appetite, like a formula or anything. I usually just take a look at what the equity markets are doing, how sensitive currencies are to the equity fluctuations, why the market is making it’s movements and combine that with my own feel for how the market is positioned for each particular currency pair.