Traders' Worst Habit - FOMO Trading.

Introduction

When you look at a chart and see something "coming up" but feel like you're missing out on something in the current price movements, it's easy to make an emotional decision to click trade before analyzing the market properly. This is called Fear Of Missing Out (FOMO), which is when anxiety increases as you watch others get profitable trades that you missed out on. The only way to overcome FOMO is to put in place measures that will prevent it from happening again.

FOMO, which is short for Fear Of Missing Out, is a social anxiety or a kind of mental health disorder.

FOMO, which is short for Fear Of Missing Out, is a social anxiety or a kind of mental health disorder. It’s the fear of failure and missing out on something. People who suffer from FOMO are not just afraid that they won’t be able to find another job, but they also worry about being left behind by others when it comes to career success and personal relationships.

The fear of missing out is real because it leads to irrational and emotional decision-making in trading. You want to buy now because if you wait too long then prices might go up even further! In reality though, rising prices only mean higher risks (and losses).

Anxiety increases as you watch others get profitable trades that you missed out on.

FOMO is a social anxiety disorder that causes people to feel anxious when they see others engaging in activities they are not part of. It’s often triggered by posts on social media, and it may lead those who suffer from it to make irrational decisions. For example, if you see your friend go to the movies while you stayed at home, this can trigger feelings of jealousy and envy that lead you straight into FOMO.

In trading circles, FOMO refers specifically to making trades based on your emotions after watching other traders make profitable deals that could have been yours had you been paying attention. We know this isn’t rational behavior—but we do it anyway!

The fear of missing out is real, and for most traders it leads to irrational and emotional decision making.

The fear of missing out is real, and for most traders it leads to irrational and emotional decision making.

The FOMO phenomenon is a mental health disorder with symptoms of intense anxiety that an exciting event may currently be happening elsewhere. In trading terms, this means that you think your stock should be rising but it isn't. It also means that when you see other stocks rising in price, you get very anxious about why your stock isn't doing the same thing.

FOMO trading can lead to poor decisions because of its ability to cloud judgement by causing investors to focus on short-term gains instead of long-term gains.

FOMO trading can have devastating results on your trading account since trades are made without proper analysis of the market.

FOMO trading can lead to bad decisions. FOMO trading leads people to make trades without proper analysis of the market, which often leads to a loss of capital.

FOMO trading can lead to losing trades. FOMO trading is one of the most common reasons for traders taking their losses too early and missing out on significant gains that could have been made if they had simply held onto their positions until they reached their target levels or exit points.

FOMO trading can lead to increased risk taking: When you're under pressure from your emotions, it's easy for traders to start taking more risks in an attempt at recouping losses or making big profits quickly before their positions turn against them completely; this increases their risk profile and often leads traders straight into another losing trade!

FOMO Trading also leads people into increased trade frequency: The more frequently you trade, the higher your risk level will be due in part because this increases transaction costs but also because it makes technical analysis harder since there isn't enough data collected within a given timeframe (and more importantly) there are fewer opportunities available during any given day/week/month which means there are fewer chances for these opportunities coming up again in future periods so if one doesn't hit...well...then it's probably not going anywhere anytime soon!

Finally - FOMO-driven decisions often result in increased position sizes which means greater risk exposure since larger positions require higher stakes just about everywhere else too (like margin requirements).

When looking at a chart, you see something coming up but because you feel like you're missing out on something in the current price movements, you click trade before analyzing the market properly.

When you see something happening in the market and want to get on board, but are afraid of missing out on more gains, you click trade without analyzing the market properly. This happens because you feel like everyone else knows something that you don't. It could be a social anxiety or even a kind of mental health disorder (FOMO).

This is where greed starts creeping into your trading strategy and manifests itself as fear of missing out on profitable trades. You start worrying about what others are doing and whether they'll get better results than yours—and this increases the anxiety level until it clouds all judgment and leads to impulsive trading decisions.

A disciplined trader will not fall into the trap of FOMO because they have clearly defined rules that they follow when placing trades.

A disciplined trader will not fall into the trap of FOMO because they have clearly defined rules that they follow when placing trades.

They have a plan, and they stick to it.

We have several articles on how to have proper trade setups:

•  How I Setup my US30 Opening Trade 
• The Perfect BUY Entry
• The Perfect SELL Entry
• The Market Wizard's Rules For Winning!

 

Disciplined traders know their risk management strategy inside and out, so they know how much money to allocate for each trade, what their position size should be, and how much capital is allocated for each type of trading strategy (long term vs short term). They also have an exit strategy in place before entering any trade which should include a profit target, stop loss or both.

A disciplined trader is not afraid to take losses because he/she knows that losses are part of the game and necessary in order to make profits over time. If a trade goes against them then instead of trying desperately to get out at breakeven or better - like many amateur traders do - they follow through with their exit plans as laid out above!

The only way to overcome FOMO is to put in place measures that will prevent it from happening again.

The only way to overcome FOMO is to put in place measures that will prevent it from happening again. The first step is creating a trading plan and sticking to it. Make sure you document your reasons for entering each trade in your trading journal so that you can review them later, and don’t get caught up in the excitement of a trade.

If you have already faced this challenge, here are some additional tips:

• If possible, don't check the price of your position while at work or while sitting around waiting for something else to happen (e.g., dinner). If checking the price becomes an uncontrollable urge, set a reminder on your phone so that when it goes off, get up and walk away from the situation where there are no distractions (e.g., bathroom break).

• Don't overtrade or under-trade based on emotions instead of fundamental analysis – take some time before entering a new position so that its potential risk/reward profile makes sense based on market conditions at the time rather than just how much fun/excitement/fear caused by seeing prices move without any fundamental change behind them

You need to document your reasons for entering each trade in your trading journal so that if things go bad you'll understand why it happened.

To overcome FOMO trading, you need to document your reasons for entering each trade in your trading journal so that if things go bad you'll understand why it happened.

At the top of the page write down what you want to happen in the trade. Next, write down what you expect will happen in the trade at different points in time (like every week). Then, write down how long your stop loss is on each position (the point at which it will automatically get closed) and how far away from that price level are current market prices.

Finally, consider writing out an exit strategy which might sound something like: "if price action hits a certain number then I will exit".

Creating a trading plan and sticking to it helps prevent make emotional decisions while trading.

To prevent FOMO trading, it’s important to create a trading plan and stick to it.

• Create a trading journal. A good way to start is by creating a trading journal in which you record all of your trades and the reasons behind them. Keep this document in front of you while you trade so that if an opportunity comes up that makes sense for your strategy, you can refer back to it before making a decision. This will help prevent emotional decisions based on fear, greed or any other distracting emotion.

• Track net profit/loss using an Excel spreadsheet or Google Sheets (or any other app). This will give more perspective on how profitable each trade has been over time so that if something goes wrong there are no surprises later down the line when putting together your taxes!

Mindset & Discipline can help keep FOMO at bay.

The most important thing you can do is to keep FOMO at bay and not trade out of fear. Even if you have a plan, trading without discipline can be devastating.

It is critical to develop the right MINDSET for trading psychology.  This Positive Affirmations exercise if watch at least twice daily will help build a strong, resilient mindset for trading with out FOMO.

There are many reasons why people lose money in the stock market. The main one is that they are too emotional and eager when it comes to making trades. When things go well, they're happy and excited; when things don't go their way or they see other people making money faster than them, they get angry and frustrated—and try to make up for lost time by buying or selling at the wrong times. This is what happened with me back when I was first starting out as an investor: In my excitement about making money from investing, I started getting impatient with the process and began making more risky trades just so that I could "catch up" with others who were doing better than me (or so I thought).

Closing

We hope that you've learned something from this post. As we mentioned before, FOMO is a complex phenomenon and it takes time to get to know yourself as a trader. But with patience, discipline and a positive mindset, you can overcome your fear of missing out on profit opportunities by following the basic tenets of trading: research, analysis and risk management.