“Hey, Sam. Did you know you missed out on Dogecoin?” “Everyone made a fortune off it.”
As an investor, you are terrified by questions like these in many cases. The scare is so much that there is even a term for it: FOMO (fear of missing out). FOMO is mainly prevalent in people between the ages of 18-35.
Additionally, it has become more popular in the crypto space, which has seen investors engage in irrational and sometimes unsubstantiated trading decisions.
So, what is FOMO in crypto, and how can you prevent it as a trader?
What is FOMO in Cryptocurrency Trading?
The fear of missing out (FOMO) is a common trading or investing sentiment in cryptocurrency. It is your nervousness when a coin you missed buying starts to gain rapidly or when everyone (apart from you) seems to be investing in the newest DeFi/NFT/Blockchain project.
FOMO in crypto leads people to buy assets at their highest prices or even sell them at their lowest rather than vice versa. In most cases, the consequences of crypto FOMO can be worse and more profound than a loss of invested capital. In most cases, it leads to damaging situations.
Based on behavioral economics, market fluctuations are substantially impacted by both general market psychology and individual emotional states or trader psychology. As such, the fear and greed index can give information about current market sentiment.
Trading and investing in crypto may cause many emotions, from fear to hope. Besides, a mixture of these feelings, notably panic, impatience, envy, fear, and hope, causes FOMO in crypto.
How to Avoid FOMO in Crypto Trading
The first step in avoiding FOMO is the acceptance that FOMO is a common emotion. In the crypto industry and beyond, FOMO has an impact on everyone. However, if you take the necessary steps, FOMO can be prevented or at least minimized.
Such steps may include:
1. Create a Trading Plan
Before venturing into crypto trading and investing, you should ensure that you have your short-term, long-term, and exit goals, objectives, and ambitions. It also must have a summary of the coins you own and those you want to purchase.
Traders will likely successfully avoid FOMO surges if they take time to set their trading plans. You are less likely to be misled by weak trading signals when you have a defined approach and specific trading objectives.
2. Read the Charts: "Facts Over Feelings"
In Crypto, the phrase “Facts over Feelings” should always be in your mind while trading. To have a better comprehension of trends and trading patterns, there is a need for you to read and analyze crypto trading charts.
You will have a solid foundation to stand on when FOMO hits. Study charts from recent weeks, months, or even years. As a way of improving your trading in the present and future, as a trader, you must be able to learn a lot by studying past cryptocurrency trading and price patterns.
3. Implement Risk Management
Carrying out your research is handy as it provides you with all the info you need to make your trade effective. This should always be your first step before attempting to trade in crypto.
4. Focus on Your Trades
Try and stick to the coins that you bought. It may sometimes become upsetting for a trader to see other trades succeed and win large. It would be best if you focused on your goals, trading tactics, and portfolio.
Final Thoughts
Before investing, each genuine trader should consider these essential questions:
You are buying a coin, but why?
How much of your income are you putting into the token?
Are you prepared to suffer losses?
What are your goals for this cryptocurrency investment? What is your plan of action?
Without worrying about FOMO, the solutions will assist you in making plans and achieving your goals. Long-term thinking will always better serve your financial situation than quick-win thinking.
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