FOMO. The Fear of Missing Out.
In trading, it is the fear of missing out when you see a stock or market start to rally and you get a strong desire to join in.
It’s an impulse trade and is a common pitfall, especially for newer traders. A pervasive underlying anxiety that others are having a rewarding experience. Whilst you’re missing out.
To become a successful trader you need to get FOMO out of your trading repertoire. So here are a few simple tips on how to go about it:
Tip #1: Understand what your role is. You’re a trader not a gambler. Stay true to your plan and all the hard work you’ve done developing your trading strategies.
Tip #2: Ensure your trading plan includes strict instructions that your trades are only placed well in advance. For end of day traders that means placing your trades before the market opens and never on a whim.
Tip #3: Understand that you will never latch onto every winning trade. Even when following your trading plan perfectly. You will always have losses. Yet trading isn’t about winning or losing. It’s about discipline, processes and execution.
Tip #4: Come to the understanding that trading is also often a battle with your own demons. Sounds dramatic. Yet you’d be surprised how much our upbringing and life experiences can affect our behaviours whilst trading.
Tip #5: Become an End of Day Trader. Constantly watching price action with multiple windows open on multiple screens, will only heighten FOMO behaviour. Some Traders watch their screens all day because of FOMO. Some Traders partake in FOMO behaviour because they are always watching their screens. Either way, staring at your screens all day is unhealthy and a total waste of time.
FOMO can affect us all, and at any time. It can make you feel anxious, envious of others’ success, and insecure. It’s also tiring physically and mentally. Especially when you are constantly comparing your experiences against others.
Have patience with your trading strategies. Have a long term perspective. Have high expectations yet ensure they are realistic. Have confidence in your well laid out plans and follow your rules without fail. If you can do this each and every day, then you are well on your way to showing FOMO the door.