Risk-On Risk-Off

See: Risk Shifting.

Like wax and Mr. Miyagi.

Hedge funds take on and then subtract risk with the phases of a moon. They take on more risk when they feel more confident in their vision for how a stock or a bond or a market is going to trade: the risk-off (like Easy Off, but for securities) when they're just not sure where things are heading.

So what's risk-off? Well, usually, it just means being heavy in cash, or being fully hedged, so that whichever direction things trade, the fund is financially neutral.

See: Carry.