WHAT IS FOMO IN TRADING?

The Fear of Missing Out (#FOMO ) in trading is a common problem many traders will encounter during their careers. Everyone can be affected by FOMO, from new traders to professionals with retail accounts.

The emotional component of FOMO is often a key driving force. Traders who fail to control their emotions can neglect trading plans and exceed their comfort thresholds of risk if left unchecked.

Common emotional in trading that can feed into FOMO include:

  1. Greed

  2. Fear

  3. Excitement

  4. Jealousy

  5. Impatience

  6. Anxiety

WHAT CHARACTERIZES A FOMO TRADER?

7 THINGS a FOMO trader says

1."They're all doing it, so it can't be that bad." Herd mentality can lead to irresponsible trade decisions.

2."Just think how much money I could make..." Trades governed by greed often end badly.

3. "Hmmm, I'll give it a go."

Thoughts like this show indecision - a bad starting point for a trade.

4."I should have known that would happen."

Hindsight isn't helpful. It skews perspective and makes you dwell on the past.

5. "They must know something I don't."

Trading is always unpredictable, especially when currencies are involved.

6. "I'm scared I'll miss a great opportunity."

This is #FOMO at its most fundamental. You'll have other opportunities - but it doesn't feel that way.

7."The Yen is a pretty safe bet, right? Everyone is trading it." Resting on your laurels and following the crowd doesn't substitute a strategy.

DAILYFX ANALYSTS SHARE THEIR FOMO EXPERIENCES

“Trade according to your strategy, not your feelings” – Peter Hanks, Junior Analyst

“No one trade should make or break you. With that said, if you miss an opportunity there is always another one around the corner” – Paul Robinson, Currency Strategist

“If you don’t deal with and temper FOMO in trading – it will deal with you” – James Stanley, Technical Strategist

TIPS TO OVERCOME FOMO

In order to overcome #FOMO , you must become more self-aware, and you must understand the importance of discipline and risk management in trading. there are various techniques that can help traders make informed decisions and trade more effectively.

Here are some tips help manage the fear factor:

  • Taking the emotion out of trading is key

    Learn to put emotions aside – a trading plan will help with this, improving trading confidence.

  • There will always be another trade

    Trading opportunities are like buses another one will always come along. This might not be immediate, but the right opportunities are worth the wait.

  • Keeping a trading journal helps with planning

    It’s no coincidence that the most successful traders use a journal, drawing on personal experience to help them plan.

FOMO doesn’t happen overnight; it’s an ongoing process. This article has provided a good starting point, highlighting the importance of trading psychology and managing emotions to prevent FOMO from affecting decisions when placing a trade.

Now you know how to spot and stop #FOMO in its tracks, find out how to embrace #JOMO in trading and change your mindset for greater success.