Two Types of Market Emotions: Risk Appetite and Risk Aversion

When risk appetite rises—as with US equities or non-US currencies like the euro, which are favored by investors—there is a high probability of generating alpha. Conversely, when safe-haven sentiment strengthens, currencies with safe-haven attributes like the US dollar tend to become investors' preferred choices.

Typically, we associate risk-on sentiment with a strong economy and safe-haven sentiment with a weak economy.

Investing is never about betting; it's about calculation. You must calculate losses before gains, accounting for every parachute and safety cushion.