Risk aversion and Risk appetite

Hi,
Whenever risk aversion and risk appetite plays in the market and what is the major reason for those things?
:5:

Traders are like druggies searching for a fix.
Instead of scoring heroin or booze, they’re trying to score yield.
Where can they allocate their capital, to obtain the best eventual return.

Money will flow from instrument to instrument.
Traders will try to follow the money and/or get there before it arrives.

It’s not as black and white as you want it to be.
It’s not as easy as saying- o, we’re in a risk aversion environment, so, I’m going to sell riskier instruments and flock to save havens.

To me, when it comes to trading, the underlying reason is the last thing I worry about. There is no reason as far as I’m concerned, other than that was who won control for the day, week, month , hour whatever time frame you’re looking at.
If you learn to read price action as it relates to order flow (not mere candlesticks and support/resistance) the underlying reason becomes as important as what Kim Kardashian is having for dinner tomorrow- irrelevant.

Jake

Hi Jake,
I understand.Thank u …:slight_smile:

Hi,
Jake what do you mean with this:
"If you learn to read price action as it relates to order flow…"
What would be the best place to see some info on this???
Thank you

Well said, Jack.

Millions of generations over billions of years have given modern humans their biological biases. Fear and greed are among those things we have inherited from our ancestors who lived in relative ignorance and scarcity. Fear and greed were biologically advantageous to them. These traits are handicaps to traders. The psychology of trading is the effort to overcome those handicaps and traders use a lot of techniques and things in that endeavor. One option is to use acid.

Search out Chris Capre’s material on his website and this forum.
He has very solid ideas on impulsive vs. corrective price action. This is where you should start.

taking risk always excite us, and thats why sometime even after knowing we tend to take risk to make profit.