The big problem for many traders is that they are afraid of missing important events. As a result, they commit rash actions, which then lead to losses. With the development of social networks, instant messengers, the emergence of various channels, etc., in short, an overabundance of news and content, the problem has become even more pressing. In this article, we’ll look at the phenomenon in more detail and provide tips from experts on how to deal with FOMO.
Lost Profit Syndrome
FOMO (Fear Of Missing Out) is the fear of missing out on something. In the world of cryptocurrencies, this refers to a person making an irrational decision to trade or invest based on some information that has not been properly verified. As a result of FOMO, people often buy crypto assets at exorbitantly high prices or, on the contrary, sell at low prices. But financial losses are only half the problem. In advanced cases, constant panic causes problems with health and family.
Why FOMO is dangerous:
For the wallet - loss of funds or lost profit.
For the individual - the impact on the psyche due to capital losses on unsuccessful investments, especially on a large scale. If you do not fight the phenomenon, a person can lead himself to depression.
For the market, the mass effect of FOMO often leads to the promotion of scam projects and shitcoins, and people begin to buy them en masse. For example, this happened with the SQUID token of the Squid Game and many others.
FOMO appears in the crypto community for several reasons, and it is important to understand the main ones, this can help prevent emotions.
Below are the main reasons, but in reality there are many more:
The desire to catch the next big market move. Bitcoin and Ethereum have risen by thousands of percent in just a few years - who wouldn't want to grab their fortune like early investors did?
The belief that early players always win. Forces you to invest in new untested projects in the hope that they will then take off and provide multiple profits. In fact, most of the projects appearing on the market are initially scams. You need to do some serious research before investing.
The desire to avoid losses. Yes, sometimes FOMO works not only towards making money, but also towards protecting against losses. One notable example: the collapse of TerraUSD (UST), a stablecoin that lost 70% of its value on May 11, 2022.
Information overload. Almost everyone who is interested in cryptocurrency subscribes to many channels, bloggers, chats, and visits thematic websites and forums. On the one hand, this is good, but on the other hand, it can easily cause FOMO due to the appearance of some unverified rumor.
It should also be taken into account that the crypto market is relatively new and untested compared to the classic one. And the barrier to entry is lower here. This is why inexperienced newcomers enter the field every day with little understanding of how the market works, and almost all of their actions are driven by pure FOMO.
Signs of FOMO syndrome
There are three main signs by which you can determine that you are experiencing FOMO:
You are obsessed with constantly checking prices. Open your exchange or wallet every five minutes to see how the price of the cryptocurrency has changed.
You constantly scan your social media feed, looking for the latest news and rumors on crypto topics. You are afraid of missing important information during the day.
Feel the power of the crowd. The herd mentality is incredibly powerful, even if we don't realize it. Seeing that many are investing in a particular project and are convinced of its growth, you too follow the crowd without even doing your own research.
Having FOMO can lead to irrational behavior without a carefully crafted, thought-out strategy. Instead of conducting fundamental analysis, traders buy or sell cryptocurrencies simply by reading the news or following the crowd. Thus, FOMO is extremely dangerous for crypto investors, often causing them to invest in fraudulent ICOs or panic sell promising coins. Investing should never be emotional.
Recommendations and tips on how to avoid FOMO syndrome?
In the short term, markets (of any kind) are always driven by two basic emotions: fear and greed. Too much of any of them can lead to disaster.
To overcome the purely human fear of missing out, experienced traders recommend using several tips, or rather exercises:
Focus not on earnings, but on goals. Why exactly do you need money? This could be buying a car or a house, or maybe a comfortable pension. Write down your goals and determine how you can achieve them through trading and investing. Spread out your investments and decide what part of your money is suitable for risky decisions and what part is not.
Get ready for long-term investing. Those who seek immediate income are often susceptible to FOMO. Passive investing for years to come is a completely different story. The decision to buy a “fashionable” cryptocurrency is simply an emotion. You need to carefully choose projects that are truly worth your savings. Then the “roller coaster” in the market will not worry you - because you are sure that in the end you will still make money.
Build a portfolio of quality investments that includes only a small percentage of higher-risk, but potentially high-return assets. Think about growing companies that benefit from technological and economic trends rather than short-term events. Having collected the main group of such assets, you can add a few more speculative ones.
Useful practical materials on crypto trading
On our website Altcoinlog.com you will find many useful tips related to crypto trading. In addition, we recommend considering the following materials:
Binance Academy – https://academy.binance.com
Educational platform from Coinbase – https://www.coinbase.com/learn
Coindesk – media platform with news, podcasts, research – https://www.coindesk.com
Another useful thematic platform is https://cointelegraph.com
Comprehensive financial information from https://www.investopedia.com
Training courses from universities
The more you know, the more confident you are in your decisions, which means you experience less FOMO.
Conclusion
The fear of missing out on something accompanies us in many areas of life. We are always under some social and social pressure. In the financial world, FOMO can lead to real drama. Investors flock to unknown crypto projects, which often leads to losses. At the same time, there is no clear “recipe” against FOMO: the main thing here is your own willpower. Also remember that missing out on opportunities is not always a bad thing, and history has thousands of proofs of this.