FOMO is one of the many phenomena that investors and traders of all kinds regularly encounter, both in bitcoin and other cryptocurrencies, as well as in traditional investing. However, within a few years, this term gained its full meaning with the advent of cryptocurrencies and the massive arrival of a new wave of investors. Overview of a syndrome that is well known to be poorly controlled.
What is FOMO?
The FOMO is an acronym ‘Fear of losing’to know the fearAnd the suffering Experienced with idea miss the chanceto miss something.
This phenomenon, identified many years ago, owes its true development to the advent of the Internet and social networks. Increased access to information tenfoldallowing us to know everything at all times.
Obviously, this is not without consequences: our minds find it difficult to deal with all the demands it faces. Our judgment is weak and our frustration is constantly tested.
If many aspects of our lives today are affected by FOMOthe latter takes on a special meaning when one is interested in investing and Cryptocurrency trading. Who has not, for example, monitored the a . track Alt currencyWho waited before investing, saw a 10% increase and regretted this missed opportunity?
This close connection between FOMO and the cryptocurrency market is due to several reasons:
- cryptocurrency price Exploded in recent years.
- ecosystem in full growth New trends are constantly emerging.
- The Success stories and the others Record gain Internet rumor.
- Many inexperienced investors DISCOVER TRADING through cryptocurrencies.
- The first gates to the sector are social networks and influential people.
Thus, cryptocurrency enthusiasts are overwhelmed by the ever-increasing information and demands Constantly sorry And experience the feeling of missing out on a golden opportunity, investment, or profitable trade.
A phenomenon that can hide a lot Risks…
Why beware of FOMO?
Given its intrinsic definition, you now realize that submitting to FOMO undermine our Psychological health. But the real danger in investing and trading lies above all in the fact Surrender to FOMO.
Surrendering to FOMO is putting yourself at risk by building your investments on a foundation feelingsfor you Temptations. It is the abandonment of all thinking and strategy in favor of primary feelings often irrational and deceptive. He acts based on these phrases that always resonate in your head: “I could have earned more,” “I knew it would keep going,” “This time I feel good.”
However, these feelings are the worst enemies of the investor and the trader. They make it impossible for you to take minimal precautions to ensure that your investment offers a Positive expectation of gains.
There are many examples to illustrate this type of behavior and its consequences :
- While I set an entry zone on a cryptocurrency, its price does not stop for height. After a 50% rise, you end up investing for fear of missing out on the opportunity of a lifetime. Unfortunately, this cryptocurrency is declining and you Resale at a loss.
- After a few bad deals, you invest all the rest of your savings into a project promoted by your favorite influencer without doing your research. Unfortunately, it was a scam and you lose everything.
- After hearing the amazing gains in the new trend, play to earnI decided to invest in a project of the moment. Unfortunately, the latter is greatly overestimated and you are collecting them Big losses.
As you understand, crypto enthusiasts often give up FOMO in reply to mass effect. In addition to the fact that the mass … most often the loser, it is this crowd psychology that cause irrational movements in the market, and are often the cause of speculative bubbles.
This can be explained quite simply: we observe the way others behave in order to find the appropriate behavior to adopt in a given situation. Some “influencers” understood this well and used these concepts to generate a feeling FOMO with their communities.
So we are generally led to succumb to FOMO During the last phase of the upward movement, that is, when:
- become increase illogical.
- Excitement is at its peak.
- Forward-thinking investors Profit taking.
- The The risk/return on investment ratio is the worst.
Of course, it is possible to make profits after surrendering to FOMO. However, failing to improve your trading habits is tantamount to betting on potential short-term gains against it Some long-term losses.
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How to beat FOMO is usually learned in pain And after getting it expertise it is necessary. 10 principles of common sense On the other hand, it can allow you to pass through the cracks:
build a plan
Perhaps this is the principle that includes all others: do not try to reach the end without going through the starting square. And when it comes to investing and trading, square one is yours strategy.
Choose the plan that works for you, that you know how to adjust and stick to. Do not give in to your primal instinct, Set yourself limits About the permissible profits and losses and the obligation.
Refine your risk management
Build a balanced portfolio for yourself, dedicate a small portion of your portfolio to risky projects and Reducing the effects of leverage.
do not forget to Profit taking And don’t be more greedy than your business plan calls for.
Do Your Own Research (DYOR)
Enquiry In the project before investing, understand the complexity of this market before it pledges to force you to understand it.
Don’t believe everything you read (even here): everyone who inspires you has Already cheatedHe will be wrong again and may deceive you.
Prefer Dollar Average Cost (DCA)
The DCA It is an investment strategy that involves investing a fixed amount in cryptocurrency at regular intervals. Encourage this kind of strategy to Facilitate your entry price Based on Reduce the effect of fluctuations on your overall investment.
do not hurryDo your research on time and always give yourself time to think things through before you act.
Allow time for the market to let you To achieve the goals that you set yourself. Your purchase order is not triggered? Regardless, there will always be other opportunities that will tick all the boxes.
Take a step back
Take the necessary step back on your investments, the evolution of prices and the volatility of your portfolio. Lack of hindsight is one of the main reasons why you will make hasty decisions like giving in to FOMO.
Face your certainty
disassemble them mental models It is fueled by social networks that distort your appreciation of reality. Despite appearances, not everyone profits from investing in cryptocurrencies. Many lose, make mistakes, have setbacks, and never talk about them.
learn to accept
Learn Accept your failuresThe lack of time to devote to your research, the missed opportunities…you are not and never will be in all the right moves.
Don’t be isolated
Surround yourself with people who feel the same, compare your opinions and Share your difficulties to beat them together.
However, be sure to respect other principles so as not to succumb to a potentially harmful collective influence.
Follow the trend intelligently
It may sound paradoxical, but if you follow the previous advice, the stages of mass FOMO are for the informed investor, period synonymous with opportunity. Learn how to enjoy it while maintaining your Accuracy.
So you will have understood that undergoing FOMO will make you make the worst decisions. Fortunately, respecting some principles should allow you to face the market with more serenity. In the meantime, you can also turn to the stablecoins and their many strengths.
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