In this chapter 6, the main character will be the FOMO psychological effect. Recently, I've noticed that the surrounding environment and online communities that I participate in are all using the term FOMO a lot, but it seems that many people do not understand it correctly. They confuse the FOMO psychological effect (Fear of Missing Out) with herd mentality or mob psychology (Crowd psychology). These two types of psychological effects are fundamentally related, however, both are distinct psychological effects that may or may not go hand in hand.

Analyze a bit for everyone:

The FOMO effect (fear of missing out): this is a psychological effect that makes people feel anxious or fearful when thinking that they have-are-will miss out on information, experiences, or opportunities that others have-are-will have. In simpler terms, it is the action of people constantly accessing social media to follow information about some hot topic, fearing missing out on gatherings, events, and not wanting to be left "OUTDATED". The same goes for investing.

Herd mentality or mob psychology (crowd): as written in chapter one, this is a type of emotion influenced by the majority, and this leads to a consequence of not considering when making decisions or having some but not significant. This type of emotion does not necessarily originate from the fear of missing out but also from external social pressure or the feeling of safety when following the majority.

As you read the comparison above, you will see that a part of the FOMO effect (Fear of Missing Out) is a reason leading to the herd mentality or mob psychology effect (Crowd).

Example: when they see that many people are investing in a coin A, fearing that they will miss out or lose an investment opportunity, if they don't invest, they will be at a disadvantage. If coin A isn't good, then why is everyone buying it? Surely not everyone investing in that coin is *** and then they decide to follow the crowd.

===\u003e FOMO effect (Fear of Missing Out) # Herd mentality or mob psychology. They are linked but do not necessarily go hand in hand.

2 examples for the above statement:

Example 1: You don't want to be left out, so you often check social media for updates (having FOMO but not falling into herd mentality or mob psychology)

Example 2: In an experiment, in a clinic, there is 1 person who knows nothing and 5 others who are members of the experimental organization. Whenever called, the organization's members would raise a hand and go in. After calling 3 members of the organization, they call the "lucky" person - The person who is added to an experiment that he does not know - the guy does not raise his hand and is looked at by the other 2. After a certain hesitation, the guy still decides to raise a hand and go in.

Let's go back to our main character, FOMO.

So what causes this psychological effect?

- Lack of personal satisfaction: these people do not know how to control their desires, always feel that life is not interesting enough, feel disadvantaged and easily lured by the pleasures and good opportunities that others have.

- Unhealthy social comparison: People often find themselves in a state of comparison where they always compare their weaknesses with the strengths of others. It is really hard to make them understand because they usually only believe in what they see.

The harm FOMO causes in investing:

- Buy high, sell low.

- Increased risk ratio when the market is/soon will be adjusted.

- No clear strategy

- The worst thing is... Not knowing when to stop, always running after the crowd.

How can we control FOMO in investing?

-\u003e Have a strategic purpose before investing in any item.

-\u003e Manage your own emotions, let the "Human" part control the "Animal" part in this profitable investment market.

-\u003e Learn from mistakes

-\u003e ....