FOMO means fear of missing out is very common in trading. Whether it is the stock market, forex, crypto, or commodities. Most of the traders face this problem almost every day. FOMO is a very highly valuable skill for traders. Not only does FOMO have a negative impact, but it also could be judgment which is creating problems while making trading decisions. Fear of missing out in trading is the biggest problem that can trigger a trader to make an illogical choice in a desperate bid to avoid the bitter regret of being last off the table. that’s why overcoming FOMO in trading is mandatory for every trader.
What is FOMO in Trading?
FOMO is basically a kind of anxiety or depression that most traders experience when they feel that they might lose an opportunity to trade. From their point of view. They think this is the best opportunity they have. Every trader might grab this opportunity so why not me? They also think if they don’t trade on this opportunity. The Opportunity may not come again which is not true. When this type of thinking or behavior turns into a habit. It is called FOMO. It’s hard to give up this habit. It’s hard but not impossible. We will discuss how we can overcome FOMO in Trading.
How to Identify FOMO in Trading?
If you have a problem. There must be a solution. There is a solution to every problem. But first, you have to identify what the problem is. The problem is really a problem or not? What criteria meet the problem you have? You have to find all of these questions so that you can overcome FOMO in Trading.
In Trading getting rid of FOMO is more likely a life lesson than a Trading skill. If you overcome FOMO. It will not only help you to become a successful Trader but also a good human being as well. So how can you understand if you have ever faced FOMO or not? First of all, do you feel any kind of changes in you like a beating heart fast when a trading opportunity comes to you? Or are you starting to sweat? The second thing is when a trading opportunity comes to you, you take the trade before fulfilling its all criteria. Because you think about a big opportunity that you missed in the past? If you have all of these symptoms or even just one of them. Then it means you are experiencing FOMO.
Where Does FOMO In Trading Come From?
FOMO is totally related to our inner mind. When a trader trades. A lot of things happened in his mind while trading. For example fear, greed, jealousy, impatient, and revenge. All of these are forms of his emotions. Maybe you take trade early because you don’t want to miss this opportunity that’s called fear. When you are in profit and still looking for more opportunities and can’t control your temptation. Because of greed, you take the trade early to get more profits.
When you see some social media influencers who lead a very luxurious life by doing trades. You feel inspired by him and take big risks. You may feel that it’s an inspiration. But it’s called jealousy. Because you want the same life as he already living. If you are truly inspired by him. Then should focus on learning. Success doesn’t come overnight. Lastly, comes revenge or anger. When you already face losses and you want to recover that loss just in one trade that is called revenge. So all of these are emotions of our inner mind that are related to FOMO.
What Factors Trigger FOMO In Trading?
As you know FOMO is totally related to our emotions. So there are a lot of possibilities that trigger FOMO.
1. Volatile Markets
The everyday market is not the same. The financial market changes every day. Sometimes the market is stuck in an area. Someday the market follow the trends. And some cases volatiles as well. When the markets moves volatile. Some traders try to catch the trend lest they should miss the opportunity. And thus they forget about their trading plan.
2. Big winning Streaks
With previous victories on your side, it is easy to discover and seize new opportunities. And that is okay since everyone else does it, right? Unfortunately, winning streaks do not persist indefinitely. But those winning streaks trigger their FOMO.
3. Continuously Losses
Repeated losses one after another can seriously trigger a trader’s FOMO. Because when a trader sees that his trading strategy gives him back-to-back losses. Then he started to doubt the strategy and thought that this strategy might not work anymore and then he searched for a new strategy. It gives him a low feeling and it creates self-doubt which is part of FOMO.
4. News and Rumors
Trading is a game of probability. So you can not say with 100% surety that the market will go up or
down. But some news or rumor spreads wrong information which is opposite to a trader analysis and it triggers FOMO.
5. Social Media
When it appears like everyone is winning trades, the combination of social media and trading can be poisonous. It is critical not to take social media content at face value and to spend time researching influencers and evaluating posts.
How To Overcome FOMO In Trading?
Accept the FOMO
Most people don’t know that they are in FOMO. If you have faced those things that I mentioned above. That means you are in FOMO. To overcome this problem you have to accept it.
Work with your psychology
Trading is 20% technical analysis and 80% psychology. You have to work with your psychological facts related to trading like emotion control, patience, Risk management, money management, and revenge trading. When you have done with your psychology. You can easily get rid of FOMO.
Keep Learning Always
Trading is a lifetime earning and lifetime learning process. Cause the market change every day and you should keep pace with it. That’s why there is no alternative to learning. You can read trading journals regularly to increase your knowledge, and skills and keep up to date.
Be Realistic
Trading is not a gamble that makes you a billionaire overnight. Trading is a journey of process. It takes time to become successful in trading. A trader must have to face losses. If you pass the losing day without losing more money. Then you can survive in the long run. Think and set realistic goals. Don’t try to be rich quickly by trading. Yes, you can make money more quickly than any other side hustle. But not overnight. So be realistic.
Use a Good Strategy
A good trading plan or strategy is needed for disciplined trading. Use a good strategy which suitable for you and has a good win ratio. Back-test it before applying it in real trading.
Stick to your trading plan
Don’t change the trading plan again and again if you face losses for some trades. Profession traders always stick to their plans. If they lose a trade. They try to find what mistake he made. They find mistakes in themselves, not in the planning. But you can upgrade the same strategy to increase your winning ratio.
Think of Trading as a business
Never think of Trading as a quick rich scheme. Think of it as a business. In business, there are not always profits. Sometimes we have losses too. The same case in Trading. If you think of Trading as a business you can easily accept losses and get rid of FOMO.
Conclusion
Overcoming FOMO in trading is possible if you do all these things. Remember patience and discipline is the key to trading success. Successful traders don’t have Aladdin’s magic lamp. They follow these rules. they did hard work. they passed a lot of sleepless nights. So try to improve yourself. One day you will also become successful. Till then keep learning and keep trading. Thank you for reading. let me know in the comments what you think about FOMO.