Unbeknownst to most traders, fear does not only stem from declining stocks, it also occurs on soaring ones. FOMO, or Fear Of Missing Out, happens when you enter a trade just because you \u201cfear\u201d out of missing from that opportunity or move. FOMO is defined as a \u201cpervasive apprehension that others might be having rewarding experiences from which one is absent.\u201d<\/p>\n
A rational, calm, and disciplined trader should trade like this: he creates a watchlist during the weekend, charts them, and prepares a trading plan before market opens. Those are all pre-market activity. He executes when his buy and sell triggers get hit.<\/p>\n
A FOMO trader does not look for a specific setup. He\u2019s largely attracted to volatility and buys almost passively without ample preparation. Remember the hype about the third telco during 2018? Many investors and traders experienced FOMO on those stocks that were related to that telco craze, some investors actually spent their hard-earned money and invested in without knowing the background or capability of the stock\/company. Even people who are beginners in investing simply opened up accounts just because of the hype! This is not recommended at all.<\/p>\n
It\u2019s normal to experience anxiety when you see a stock on its way to a ceiling price, especially when you haven\u2019t been profitable in the stock market yet and not used to missing on ceiling plays. Who doesn\u2019t like missing on huge market moves? Naturally, no one does.<\/p>\n
When entering a trade, it\u2019s important that you don\u2019t enter for the sake of not missing the move. What\u2019s more important is to trade your planned trades since they are made at the time when you\u2019re most objective, rational and not emotional.<\/p>\n
Here\u2019s a possible remedy to cure your FOMO behavior.<\/p>\n
If you missed out on one high-flyer, study why you missed it. Adjust your screening strategy and forget about the \u201cwhat could have.\u201d If you\u2019re an investor, stick with your buy low, sell high strategy. Rely on the fundamentals of the company.<\/p>\n
The adrenaline rush from the pleasure and chance to generate money can really stick to your head and you\u2019ll then be susceptible to give in to your emotions. Do not rely on your instincts but rather follow a structured approach in trading the market and write down your trades in your trading journal after every single trade you take.<\/p>\n
So, set rules that will help govern your trading and follow them religiously. Structure a proper trading routine. Develop good habits to help yourself act better among different scenarios. Develop a strong will to deter your impulses. No matter how emotional you can get in the market, you should always be able to control your actions.<\/p>\n
Good luck!<\/p>\n