A blunt vocabulary for days when everything moves together — and why the labels fail.
What people usually mean
Risk-on: investors prefer equities and higher-beta currencies. Risk-off: preference for USD, JPY, CHF, and defensive assets. These are shorthand, not laws of physics.
Why the label breaks
Sometimes equities fall while a high-beta currency rises on local news. Sometimes the dollar and gold rally together. When the basket disagrees, drop the slogan and manage each position on its own stop.
How to use it anyway
As a quick scan: are most risk proxies pointing the same way? If yes, respect correlation risk. If no, avoid forcing a global story onto a local chart.
Leverage warning
Risk-off days can gap. Correlated CFD books can hit margin together. Reduce total exposure when the regime is clearly one-directional and violent.