The EdgeFinder's Risk Gauge is a powerful tool that combines short and long-term metrics to provide traders with a current bias, offering insights into market sentiment and guiding trading decisions based on fear and greed dynamics.

HOW DOES THE risk gauge WORK?

The risk gauge is a simple meter that will incorporate short and long term metrics to form a current bias. Here you can see the current reading and previous readings that compares today's percentage to the previous day's percentage at market close. The gauge is designed as a stacked chart to show what the current risk reading is compared to yesterday's reading. All percentages are displayed as positive values to either the fear or greed side

HOW CAN TRADERS USE THIS?

In investment terms, fear and risk-off are synonyms; just how greed and risk-on are as well. When several areas of the market are fearful, we are likely in or about to be in an environment where risk-off assets thrive. Oppositely, a greedy environment would indicate optimism in risk-on assets. One way to tell if we are in a true risk-on or off market is to watch the change on the meter. Seeing a continued increase in the amount of fear or greed will help determine what kind of environment we are in, and we can figure out how to trade in it.

How is the risk gauge Calculated on the EdgeFinder?

Risk Gauge Calculation

The Risk Gauge Meter combines the price action of various risk-on/off assets and measures risk sentiment of the overall market. The score goes from -6 (strong risk-off reading) to +6 (strong risk-on reading).

The assets used are a combination of indices, commodities, and 10-year bond yields (VIX, SPX500, Gold, US10Y, DXY, JXY).
This metric is good for indicating which assets are going to be bullish or bearish. For example, if the risk meter is at -4, it suggests that USD, CHF and JPY could be bullish. If the risk meter is at +4, it suggests that AUD, CAD, NZD, GBP, EUR, XAUUSD, SPX500, could be bullish.

The bias output is scored this way:
-2 to +2 = neutral
-3 to -4 /+3 to +4 = “risk-off”/”risk-on”
-5 to -6 / +5 to +6 = “heavy risk-off/ heavy risk-on”

Frequently Asked Questions (FAQs)

View more FAQs here.

What time frames can you use the edgeFinder on?

The EdgeFinder gives directional bias and is not time based. Therefore, there is not a specific time frame that is best for the EdgeFinder.

What assets are included on the EdgeFinder?

Forex Majors:
AUDUSD, NZDUSD, USDZAR, GBPUSD, USDJPY, USDCAD, USDCHF, EURUSD

Forex Minors:
AUDCAD, AUDCHF, AUDJPY, AUDNZD, CADCHF, CADJPY, CHFJPY, EURAUD, EURCAD, EURCHF, EURGBP, EURJPY, EURNZD, GBPAUD, GBPCAD, GBPCHF, GBPJPY, GBPNZD, NZDCAD, NZDCHF, NZDJPY

Metals:
XAUUSD, PLATINUM, SILVER, COPPER

Energy:
USOIL

Indices:
GER30, US30, SPX500, US10Y, NAS100, JP225, UK100, RUSSELL

Bonds:
US10Y

Is the EdgeFinder realtime?

While the EdgeFinder is not necessarily realtime, it is fully automatic in its data collection. The EdgeFinder uses a variety of data sources and inputs. Most price data updates are on a 15 minute timer, while economic data updates every few hours. COT data updates weekly (as it only releases 1 time per week), and retail sentiment updates every 30 minutes.

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LINDEX is a leading financial analysis and trading education company dedicated to empowering traders of all levels. Our team combines extensive market knowledge with cutting-edge technology to provide valuable insights and tools for traders worldwide.

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Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and is not suitable for everyone. You may lose more than you invest. Price and performance data is provided for informational purposes only and is not investment advice. Past performance is not indicative of future results.

There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.

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Risk on / risk off Gauge