FOMO - FEAR OF MISSING OUT!

FOMO aka Fear Of Missing Out! This is probably one of the biggest issues surrounding all types of traders but affects the rookie traders more heavily. Before we get into how to avoid it, lets talk about what FOMO is and how it affects you as the trader. FOMO is our enemy and even seasoned traders deal with. It influences our decision-making on the trades we take.

FOMO is a root cause of making you jump into traders too early or late to......closing winning trades way too soon because you and I don't want to give back profits. Or even worse, risking too much because patience is lacked in growing your trading account. But what causes this phenomenon known as FOMO?

There are several causes. Impatience, No Rules, High Expectations, Lack of Confidence and vice versa Over-Confidence. The biggest of these that I have seen and dealt with personally are impatience and no-rules!

Impatience is not waiting for the setup and you just randomly enter because you fear the price might run away but this stems from having no-rules. When you don't have system or a set of rules that you follow for entry, stop-loss, take profit, exit, etc, your default mode is FOMO. The other three causes listed can be beaten with ease but it takes experience and knowledge. And speaking from experience, I have dealt with all of these personally multiple times.

But, how do you, I, we fix these causes so we don't deal with FOMO again?

Like they say...practice makes perfect and you don't become a pro overnight. I tend to use Michael Jordan as an example a lot of times, but when he gets cut from his high school basketball team and yet goes onto to become arguably the greatest basketball player to ever play, then it can greatly be argued that practice makes perfect.

It just isn't practicing, but rather the first step to take is to develop a repeatable trading system that is based on a set of rules you define for entries, exits, stop-loss, times and timeframes you trade, and risk management just to name a few. Now, more importantly, you must stay be very strict to your rules. If you break your rules, there is tendency to lose the trade but more often than not when you stick to the rules, you tend to get a favorable outcome.

Why do you need this system...well one each teaches you rules to follow and helps with your trading but more importantly when you follow the set of rules you created, you basically are teaching yourself to have patience and wait for the rules to be triggered to enter your trade. Patience is one of the hardest lessons to learn because of FOMO but as long as you have a strong system with rules, and follow them strictly, you force yourself to have patience and wait for the setup.

There is always another trade setup coming. You just need to wait and have patience. In doing so, you can beat or at least limit FOMO to minimal events. If you treat trading like a business, you will get profits like a business. But if you don't and want to gamble, go to Las Vegas and give the house your money!

Happy Trading and Happy Pips!

PFX