ARE YOU A FOMO (Fear-Of-Missing-Out) TRADER? HERE’S FOR YOU!
“I should’ve known that would happen…”
“I’m scared I’ll miss a great opportunity..”
“They must know something I don’t...”
Generally speaking, Fear of missing out a.k.a FOMO is the feeling that others are having more fun, living better lives, or experiencing better things than you are. This involves a deep sense of self-esteem due to your external situation. Believe it or not, it happens to anything, including investing.
In the investing world, FOMO is a daily enemy for all traders that can influence bad decision-making on any level. It can be from jumping into the market without proper confirmation, closing the market too soon because you want to earn that huge amount of profits, or risking way too much because you are impatient to grow your money.
If you are someone like this, let’s make a bet, here are the common reasons why you behave this way:
1. IMPATIENCE
When you don’t want to wait for the setup and just right away getting into the market because you will fear the price will be bad. - BIG NO NO!
2. HIGH EXPECTATIONS
When you think that you need to double your account by next month because your FOMO haunts you - this leading to higher risk and large portion size (OH NO!)
3. NO LONG TERM PERSPECTIVE
You focus on one trade only and force this trade to win whatever it takes - this will lead to losing better opportunities!
4. Lack of confidence or Over Confidence
Lack of confidence: After losing few trades, many traders will catch up and enter random markets just to earn back their profits - and you follow them!
Overconfidence: When you won few streaks and feel invincible and take random trade markets (or taking too large positions) because you can “feel” the market growth.
Feeling attacked after reading all of these? Well, if all of the lists strike you badly, then you should stop doing this! If you want to be a successful trader, you MUST eliminate this FOMO personality immediately!
Although it’s not as easy as it seems, however, WE CAN GUARANTEE these are the proven steps that can help you overcome the FOMO:
1. Understand fully your trading system
It’s very essential to understand the system (e.g timeframe) you are trading. How many trades per day or week that you expect, what is the normal waiting and holding time, and many more implications.
By do back-testing or go back to your journal to get those numbers will create confidence when you know what you are dealing with and what to expect instead of just striking the market and wait for the luck to come.
2. Follow a solid trading plan
There are no excuses, you need a trading plan!
Trading without a plan will lead you to risk too much capital or entering trades at the wrong time. Having a trading plan will cover all of the unnecessary movements. Remember, you want to make money in the long term. Hence, you have to learn how to create a trading plan that will establish better trading strategies, and slowly you will become a more experienced trader and beat the FOMO inside of you!
3. Create Trading Journal
The trading journal will definitely help you to track your activity and reflect on the net moves. So far it’s the most excellent self-performance tool to let you spot the habits that are beneficial and observe the performance that might lead to FOMO trading.
Furthermore, a trading journal will help you to manage your risk so that you can practice good risk management. Good risk management will be your shield to make sure you won’t suffer losses that you can’t afford.
4. Practice healthy trading psychology
“Control your emotions otherwise emotions will control you!”
FOMO can be manipulative to your own emotions that drive you to do certain actions that will make you regret later - which is why so many FOMO traders don’t earn much money!
Before you even start your trading of the day, remind yourself many times that markets are never constant. You will suffer good and bad days, but the bad days shall pass too. Even if the market is bad and you feel upset, give yourself time. You are not going to make a fortune on your very first trading day (believe it or not, it happens to every successful trader too!).
Implementing healthy trading psychology is indeed a time-consuming process. You might nail it one day but not going to be fine by tomorrow. And it’s okay, don’t quit! You have to continuously refine your trading psychology over long periods. The key here is to:
- Be disciplined
- Be flexible
- Focus on your time
- Don’t stop learning
Slowly transforming your mental trading psychology will help you a lot in making practical decisions making. If you need guidance to make the best decision of your life, you can reach out to some master traders that have already traded for quite some time. They will guide you and provide step-by-step tips to overcome this matter.
5. Developing self-discipline and self-respect
“There are no shortcuts to anything worth having, just like trading!“
If you find it’s worth fighting for, you have to do what you need to do, period. Start doing the things you know it’s right to do for you.
Instead of binge-watching Netflix, start studying or reading your trading journal. Instead of relaxing and doing nothing at the weekends, start learning more trading knowledge to ace up your skills, and so many little things that you have to change and develop your discipline muscle. You can always start small and prove to yourself you can do those things you feel it’s right to do.
When you are happy with your trading activities, you will less likely feel FOMO. You have to enjoy the flow regardless of how volatile the market can be. And one most important factor to drive the joy is the knowledge in trading. If you are someone that’s not so fully equipped with the knowledge, there are several trading resources that you can find on the internet just like how we provide educational resources for traders at all levels. We help traders (even if you’re just a ‘fresh from the oven’ trader!) to understand the basics to more advanced strategies. You can also learn more about trading life from our main blog page.
This wraps up everything you need to know if you are a FOMO trader! Anyone can relate? Got any more tips to guide FOMO traders out there? Share with us! #Eappsfortify