But, more often than not, it’s a high-risk trading strategy that produces devastating losses. Social media, trading forums, and especially within the financial Twitter community (#FinTwit) forex traders can be lured into FOMO. It’s important to be aware that following trade signal on social media is not always reliable. As the name suggests, FOMO is driven by psychological emotions rather than following a trading plan. It’s that persistent voice in the back of your mind that if you don’t act quickly, you’ll miss out on a potentially huge profit. But as any pro trader will tell you, acting on emotions instead of a trading plan is a recipe for disaster.

All investors should have a trading strategy that’s based on their trading philosophy, risk tolerance, diversification strategies, and broader financial plans. Before investing in a FOMO stock, ensure that these are being followed. An investor is much better off buying low and selling high and often is more likely to make money on less popular trades. So, how do traders avoid giving into FOMO and making bad trades? Here are some suggestions for how to overcome FOMO in stock market trading. Trading when spurred by feelings of FOMO often doesn’t result in a positive return on investment.

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It’s that feeling that there’s something better on the other side of today or this moment. FOMO – Fear of Missing Out – is a relatively recent addition to the English language, but one that is intrinsic to our day-to-day lives. A true phenomenon of the modern digital age, FOMO affects 69% of millennials, but it can also have a significant bearing upon trading practices. So, if you answered yes to at least three of these questions you are a FOMO trader. If you answered yes to two of them, you are at risk of becoming a FOMO trader. You’ve probably heard of the acronym FOMO for “Fear Of Missing Out.” Chances are you’ve felt it too.

She knew that FOMO was the culprit, but she couldn’t help herself. Her big fear of missing a potential spike often led to bag-holding after an irrational chase. If it were that easy, it wouldn’t be such a problem for traders.

Personality Test For Traders: Can You Become A Trader Or A Quant?

Another example is taking a trade which doesn’t meet all of your criteria because you believe the trade will work anyway and you don’t want to miss out.

• However, many cryptocurrencies are products that don’t solve any challenge.
• FOMO in crypto not only can affect people’s portfolios but also can translate to how healthy they are and the quality of their lives.
• The five causes below aren’t exhaustive, but the list may help lay the foundation for overcoming FOMO as a crypto trader or investor.
• The two main sources that cause FOMO in the stock market are the news and social media platforms.

However, the flip side of that coin means that “there is always a new crop of opportunities.” Investors who are more disciplined are likelier to find better opportunities. Instead of feeling nervous that you’ll be on the outside looking in as stock skyrockets in value, FOBI has you worried that a stock in your portfolio will tank before you decide to cash out. Just choose the course level that you’re most interested in and get started on the right path now. When you’re ready you can join our chat rooms and access our Next Level training library.

Managing FOMO in forex trading is a skill

And once other buyers rush in, the price runs up, which convinces other traders to buy heavily. Fear of missing out (FOMO) is a very real feeling that’s starting to permeate throughout our lives. It’s best described as a feeling of https://forexhero.info/kubernetes-vs-docker-vs-openshift/ social anxiety that other people are having fun without you. Have you ever caught yourself rushing into a trade because everyone else was buying? Or worse yet, selling off all your positions because of a temporary drop in price?

For one week, I challenged her to be that person in the corner. It didn’t have to be huge — it might be holding back on a trade she wasn’t sure about or skipping out on a party she was on the fence about attending. She admitted that since she was young, she’s always been competitive — when she sees someone else do something, she feels like she wants to do it too and succeed. She knew the rules, but she was breaking them because her emotions were getting in the way. This made the self-punishment cycle even worse, because she knew what she should be doing.