To raise money to fund various projects or ongoing operations, the US Treasury will issue bonds. US government bonds are sometimes called T-bills and release their bonds throughout the year.

Considering investments, US government bonds are considered a "safe haven" because they are as risk-free as possible. Below we have listed 3 different types of fixed income securities that are used to fund these operations:

•     Treasury bills: - aka T-note. Maturity of fixed-rate notes: 1-10 years.
•     Government bonds: - aka T-bonds. Maturity of fixed rate notes: 10-30 years).
•     Treasury bills: - aka T-bills. Maturity of fixed-rate bonds: 1 year and under.

Each fund operation pays its interest in a contrasting way, and as you can see from our list above, each fund has a different maturity. This varies from a few months to three decades. Always look out for financial media reports on the different yields.

When yields are higher, it is very likely that the market is selling government debt. Your yield improves the more the market falls. You can be sure that the sale of this risk-free asset strongly suggests that they feel confident about the broader economic scenario. This means that risk sentiment shifts from "risk-off" to "risk-on" as their returns have improved.

As yields fall, risk shifts to "risk-off", a sign of concern due to the purchase of government debt as an alternative. As a result, yields will fall due to rising prices.

The Volatility Index

In this segment of the Price Action Trading PDF, we will briefly review the volatility index. This index is commonly referred to as the VIX and looks at the likelihood of a particular market making an abrupt or unexpected price shift, as well as market uncertainty.

To have a good understanding of the level of risk, you can use VIX to make a guess about how worried stock traders are. Some people refer to VIX as the "fear indicator" or "fear index" for this very reason, and it remains one of the most commonly used indices for volatility across the board.

The S & P 500, for example, can be used to measure market probabilities of future volatility. For example:

•     If VIX indicates a value of over 30, this is considered volatile.
•     If this is 20 or less, it is considered calm.

The higher the VIX, the more the market will panic. This of course means that the lower the VIX, the calmer the market will be.
Fiat currencies

We can't put together a price action trading PDF and fail to mention currencies! After all, they are one of the fastest moving and most fluid financial instruments in the world.

What are safe haven currencies?

As mentioned earlier, safe haven currencies are very sensitive to changes in risk sentiment and therefore react very quickly in Exness metatrader 4. This means that they either expect the currency to maintain its initial value or to increase in value in the "risk-off" landscape. 

The Forex market is open 24 hours a day, 7 days a week, unlike the USA stock trading market, with Forex you can always track the risk sentiment whenever you need to check.

Below are some commonly used currencies for safe havens.

USD (US Dollar)

Considering the strength of the USD, this is a perfect representation of a risk sentiment. The market would likely be very disappointed if the financial media and economic data reported that the USD was stronger than other high-yielding currencies.

In most cases, this usually leads markets to view the US dollar as a "safe haven". Interestingly, this causes the value of the USD to rise when a collection of investors do so at the same time. If you are considering buying US government bonds (as a "safe haven"), please note that if you have not already done so, you will need to buy USD to make this purchase.

CHF (Swiss Franc)

Switzerland has remained strong through many financial crises over many years, and the Swiss Franc (also known as CHF) still has great strength as a currency. When the financial media reports that high yielding currencies are weaker than the CHF, this can be a strong indication that there has been market turmoil in Europe. In this case, the action shows a "risk-off" environment.