Many of us have heard of the dreaded FOMO. But for those who don’t know, FOMO stands for the term ‘fear of missing out’. The term FOMO normally refers to the fear of missing out on an exciting event, such as a party. However, the term can also be used in relation to trading. So what does FOMO in trading really mean?
In simple terms, a FOMO trade is a trade that we feel we must enter out of fear of missing out on the move. As we all know, the index can be extremely volatile, and that is what makes them so exciting. It is only natural that we want to be part of the action, especially when an index is volatile in one particular moment.
It can be difficult to simply sit back and watch as the index dances before your eyes and not do anything about it, which leads us to feeling the effects of the FOMO trades. (Tweet this)
Although it may seem very exciting, it is often the case that these infamous FOMO trades entice us in, only to leave us feeling disappointed and underwhelmed. Why? Unfortunately, we only have our own emotions to blame. Our anxiety of missing out can create a sort of fog over our rationale, causing us to enter a trade to relieve our anxiety quickly rather than doing so in a rational manner.
With minutes or sometimes even seconds to spare before deciding whether or not to enter a trade, our brain can become overloaded and impulse can cloud our judgment. FOMO trades can be very overwhelming and can make us do irrational things if not dealt with accordingly. When dealing with FOMO trades, it is important to keep in mind these essential tips to help you overcome the FOMO trade pitfall.
Keep cool, calm and collected
It can be easy to get caught up in the moment and make rash decisions without any prior thought. With FOMO trades we can be quick to make excuses and neglect any rational or logic in a moment of panic and to just follow the crowd. One way to overcome this is to take a second and write down your reasoning for entering the trade. By doing so, you will quickly see whether you have solid reasoning or whether you are just another victim of the FOMO trade.
Listen to our indicators!
Your indicators are there for a reason. You have worked many hours to learn how to apply them and now they are an important part to your trading strategy. So listen to them! If they are telling you to stop, then stop. Your indicators can help to bring you back to reality and out of the FOMO bubble that can surround you. Ignore the urge to enter the trade immediately, analyse the trade, look at your indicators and decide whether or not it is a good move.
Take an Online Trading Course
By practicing the art of trading over and over again; it can expose you to the common pitfalls and traps that come with it. By taking an online trading course, you can learn about the most common errors of judgment of the trading field whilst also learning how to overcome those FOMO trades without actually putting real money at stake.
You will have instructors who will be able to tell you the tricks of the trade (literally) and their techniques on how to avoid the FOMO. Once you have practised many times, you will begin to feel more confident when dealing with trades. You will develop your own trading strategy and techniques, which you can then take on with you into the real world of trading.