You’ll see that acronym in every blog or forum related to trading. It is one of the biggest weakness of all traders across the world. It is one of the biggest threat to your success.
For those of you who are not familiar with the term, FOMO means the Fear Of Missing Out. There are 2 scenarios where this phenomenon occurs and we’ll discuss them here.
The first one is when you see a move in the markets and you jump on it thinking that if you don’t, you’ll miss a great opportunity to make money. FOMO ruins your entry which is one of the foundation of a good trade. A good entry maximizes you profits, it allows to know quickly when you’re wrong. FOMO cancels that and puts you in a very delicate position right from the start.
Another way you can experience it is when you are in a trade. You might be under water and don’t want to miss the miraculous reversal that will make you rich or, you might be onside, think that it will go on forever and don’t want to miss that infinite move. I know it sounds silly but if you are like me, you believed that at some point during a trade.
In the end, FOMO either makes you miss a good entry or a good exit. In both cases, you’ll agree that it is not a good thing.
Truth be told, the behaviors previously described will not systematically put you in a bad position. You could be lucky and get away with it. The problem is, luck will eventually disappear and reality will hit you with big red numbers.
In the end, if there’s one thing I want you to understand today is that there will always be another opportunity, another trade, another setup. Don’t jump or stay in something thinking that if you miss it, there’ll never be anything else. It takes a lot of discipline but if you can control that, you will avoid a great amount of pain.