Risk-On vs Risk-Off Meter (Pro)

How it works

The Risk-On vs Risk-Off Meter analyzes capital rotation between key financial assets including copper/gold, bonds, dollar, crude oil, VIX, and yield spreads. It generates a normalized risk score ranging from 0 to 1, providing a comprehensive view of macro money movement and market sentiment.

By tracking these diverse financial instruments, the tool creates a sophisticated algorithm that translates complex capital flow data into a simple, actionable risk score. This allows traders to quickly understand whether macro forces are driving markets towards risk-taking or risk-aversion.

Why it may be useful

This indicator provides traders with a macro-level perspective that goes beyond traditional price action analysis, offering insight into broader market sentiment and potential directional forces. By understanding the underlying capital rotation, traders can make more informed decisions about market entry and exit points.

The Risk-On vs Risk-Off Meter serves as a powerful confirmation tool, helping traders align their strategies with larger market trends and reducing the likelihood of trading against significant macro movements.

When to explore it

The indicator is most effective when used in conjunction with existing trading strategies, particularly for ES (E-mini S&P 500) scalping and day trading.

Traders should pay close attention to the green zone (>0.75) for risk-on environments and the red zone ( Divergence alerts are particularly valuable, signaling potential market reversals or exhaustion zones when the ES price disagrees with the macro risk trend. Traders should use this tool as a supplementary confirmation mechanism rather than a standalone trading signal.

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