Mastering FOMO: How to Handle the Market’s Falling Knife

Imagine your $100 trade makes a 400% profit, hitting your target perfectly. But as the price continues to rise, you’re tempted to stay in the game, hoping for even bigger profits—that’s the infamous FOMO (Fear of Missing Out) kicking in. Balancing the fear of losing profits with the hope of making more can be tricky, but with the right strategy, you can secure profits while preparing for both outcomes.

Here’s a smart way to protect your profits: Start by locking in $300 of your profits, leaving $100 to play with. Divide the remaining amount as follows:

Allocate $60 to a spot trade.

Use the remaining $40 to open a short position in the futures contract, but keep your leverage at a minimum of 1x to reduce your risk.

This setup protects you in both directions—whether the market is rising or falling. If the price spikes, your futures position could be liquidated, but your spot trade would double, giving you $120. If the price halves, your spot trade would fall to $30, but your futures position would increase to $80, giving you a total of $110.

The key is to let the market run its course. When the panic finally sets in, you’ll have a guaranteed profit and be ready to take advantage of the market’s fear. This strategy keeps you away from FOMO while still being prepared for any volatility the market may bring.