How To Conquer FOMO (Fear Of Missing Out)

in #bitcoin7 years ago

Anyone who has ever traded cryptocurrencies knows this feeling. It's a sick, deep-seeded emotion... a gut-wrenching feeling that can make a grown man cry like a little girl. That feeling you get when you missed out on a big opportunity and have to watch other people bask in its glory. Of course I am describing FOMO or the Fear Of Missing Out.

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Every human has basic emotions and instincts and when participating in risky activities, such as crypto-trading, you have to learn how to distance yourself from them. Investing in any market involves some element of risk and the cryptosphere is the riskiest of all. You can make massive gains overnight or take insane losses in a single instant if you aren't careful. This is where having serious guts comes in handy. Big risks often lead to big rewards but nothing is without a downside in this world.

Initially when you see a particular coin or token showing gains you might be tempted to jump right in to ride the movement upwards. This is where technical analysis comes in handy and I never make a large trade without it. Many casual investors just buy at the current market price which can be hyper-inflated if they aren't paying attention. The smart investor waits for the graph to flat line (consolidate) before putting any real investment into a currency or token. The impatient or greedy investor usually gets burned by buying into the bubble/hype.

This yearning to "be one of the crowd" is the best example of FOMO as nobody likes being left behind. Maybe its just part of our human nature to try and do what the rest of the group is doing but in cryptocurrency trading this is very foolish. Usually by the time the average investor has heard about a particular investment the price is already in the hyperbolic stage. Any experienced buyer will tell you that you should never ever buy into something that is moving hyperbolic because what goes up MUST come down.

Look at Ethereum for example, which spiked up to $420 USD only to drop back to $130 about a month later. It is now trading around $225 but a LOT of people got burned when they bought in around the $300-400 level. Those investors will either have to sell at a loss in order to have some liquidity for trading OR hold onto those tokens until the price inevitably goes back up past record high (which could take a year or more). The wise and informed investor would have bought in during the early consolidations around $12, $50, and $90 respectively.

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When people see a particular coin start to go bonkers they have a tendency to liquidate their other holdings and jump on the FOMO train. This of course can lead to a downward spiral of profit losses as trading fees and market volatility eat up your capital. Whenever something starts to go up in value quickly, remember that it can come back down just as fast. Even worse is when you discover that the coin you just sold, to bandwagon something else, has gone up tremendously in value.

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Do yourself a favor an NEVER trade purely on emotions or on FOMO. The market fluctuates daily and there is always another buying opportunity ahead :) Happy trading and good luck out there!

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Check out my latest price forecast here: https://steemit.com/bitcoin/@hotsauceislethal/bitcoin-price-forecast-8-1-2017

Excellent article, I am lucky in that I am in it mostly for the long haul, so even in the early days, when i am making mistakes I can afford to hold on for 1yr+.... Very clearly put though, thanks! Upvoted and reestemed.

Excellent article @hotsauceislethal ! (could have made your name easier to tag buddy! :)

I suffered badly from FOMO when I joined the cryptocurrency train. Luckily I'm fairly tight with my cash so only had a small speculation and was calm enough to HODL with the strong assets I had already done my homework on.

Phase 2: learn more about analysis and try to be smarter not just richer...

The hard part about technical analysis is that it can't account for market manipulation which is a huge factor in cryptocurrency. I just read the article about the "Spoofy" character who has been manipulating Bitcoin markets massively.

True words! Buy low, stick to your trading plan! #RiskManagement

Agree with your piece. Though hard to stay calm in those situations, especially when people see the long-term potential and think it may not get to that level again. Well sure enough it does. Buy the dips instead of jumping on the trains instead.

Oh I've done this in my early experiences trading stocks when the penny stock market went bananas in 2014. Made a good bit then stupidly held and lost all my gains then some. Painful learning experience.

Enter 2017....I never paid much attention to the crypto currency market until this year although I had heard about bitcoin years ago and stupidly didn't buy ANY when it was cheap. Thankfully I was able to sit on my hands before the crypto currency rally settled down a bit and prices came back down before I got into a few of the coins that I now own. I am guilty of jumping into bitcoin the minute I heard about the free BCC distribution August 1 though. So far that's turned out ok for me.

If you are in it for the long haul (a few years) then you'll be just fine. If you are looking to double your money in 6 months I doubt that will happen with BTC alone. We are long overdue for a cool off if you look at long term charts. Trade the daily volatility on altcoins if you want to make a quick buck :)

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