Trading Psychology Series 002 - Resisting FOMO

𝐓𝐡𝐞 𝐚𝐫𝐭 𝐨𝐟 𝐍𝐎𝐓 𝐛𝐮𝐲𝐢𝐧𝐠 𝐰𝐡𝐞𝐧 𝐦𝐚𝐫𝐤𝐞𝐭𝐬 𝐚𝐫𝐞 𝐀𝐥𝐥-𝐓𝐢𝐦𝐞 𝐇𝐢𝐠𝐡

😏Ever felt that rush to jump into a hot stock or Crypto, because every article suggests this COULD be the next best thing? It just jumped after earnings, and it's a cool company! It is only going higher! OMG? I'll miss out on this! I MUST buy it!🥳

🤯Just as you hit the buy button, the price starts to tank. You start to notice headlines about bad news. The CEO is part of a scandal. The company misses earnings by a mile. Their competitor got good news. You are now 20% down. 30%. Should I keep this junk? Should I sell? You feel a mix of panic and betrayal. Sh*t. I screwed up. Again.😭

This is a typical emotional roller-coaster we all want to avoid, yet we are experiencing it over and over again.

𝐓𝐡𝐞 𝐏𝐫𝐨𝐛𝐥𝐞𝐦🙄

Buying High, Selling Low, - while it should be buy low, sell high.

First of all, if everyone is talking about an investment, it is already too late. Forget about it. Put it on your watchlist and wait patiently. Months, sometimes years. There is a silver lining, though. No trees are growing to the skies. Anything hyped up is probably a bubble already, so DO NOT BUY IT. It will fall eventually.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐜𝐚𝐮𝐬𝐢𝐧𝐠 𝐲𝐨𝐮𝐫 𝐅𝐎𝐌𝐎?📉

🧠It's Human nature to fear missing out on something. The whole Marketing industry is built on predatory "Limited Offers", creating a sense of urgency, countdown timers, and other sophisticated psychological tricks. Think of Black Friday, and how effective it is.

🧠Humans have a natural tendency to follow the crowd. It feels safer to join in than to miss out. Herd behavior can make you ignore warning signs. Bad news: Have you seen anyone getting rich while doing exactly the same as most people do?

🧠Confirmation bias also supports FOMO: People tend to only notice information and headlines that confirm their biases and buying intent. You ignore people who call for caution.

🧠Impatience and Anxiety, our desire for quick profits, and even worse, you not making a profit, while everyone else does, also cause FOMO.

𝐓𝐡𝐞 𝐈𝐦𝐩𝐚𝐜𝐭

📉Looking beyond the headlines, smart investors already bought into that thing months, years before. It's not a golden opportunity, it's a chance for the whales to offload their shares to you.

📉At best, you are buying an overpriced but good opportunity. At worst, the whole company is built on hopium and will tank 80%-90%

📉Buying into something and holding it in a loss causes stress, and even worse, locks down your capital. You can't buy the true opportunities when they arise!

📉FOMO is having an adverse impact on your future returns.

𝐖𝐡𝐚𝐭 𝐜𝐚𝐧 𝐈 𝐝𝐨 𝐭𝐨 𝐚𝐯𝐨𝐢𝐝 𝐢𝐭?

👉Start to read fewer headlines. If it is in the mainstream media, Financial Times, or your national newspaper, it's 100% not something you need to act on. It is history.

👉Trade less often. Investing should be boring. Even most actively managed funds don't do day trading.

👉If you do not want to deal with decisions, you could trust someone to handle them for you. Could be an ETF, or could be copy-trading on Etoro.

👉To buy low, have some cash reserves on your own. Buy when the market is panicking. May it be a trade war, terrible economic data, COVID - these will all pass.

𝐄𝐦𝐛𝐫𝐚𝐜𝐞 𝐉𝐎𝐌𝐎🙏

Embrace what? JOMO. Joy Of Missing Out.

It hurts much less to miss out on an opportunity than to jump into something questionable. If your investments are otherwise OK, performing at least market yields, just enjoy the sunshine. Even if what you missed out on was a good opportunity, there are plenty of opportunities coming up tomorrow, next week, and next month.

𝐏𝐫𝐢𝐨𝐫 𝐞𝐱𝐚𝐦𝐩𝐥𝐞𝐬 𝐨𝐟 𝐅𝐎𝐌𝐎

-Remember when $BTC (Bitcoin) was 15-20k? Nobody wanted it. It surged to 65k, and newspapers were full about the ATH, and how Bitcoin is the future. Yep, it imploded again, slumping back below 20k. Everyone was buying at the high.

-A few months ago, $UNH (UnitedHealth) was trading around $600. It "collapsed" to $410. Currently, it is $294. Could it still go lower? Sure. I am waiting for an entry point, below $250. Will it reach that point again? Not sure. But I am happy to miss out on it. JOMO.

-Other famous stocks that collapsed at one point in the past 5 years: $PYPL (PayPal Holdings) $BABA (Alibaba-ADR) $META (Meta Platforms Inc)

-Popular Investors on Etoro notice a large influx of copiers when markets are at peak, and newspapers are telling people how much money is made on the stock market. However, copiers dry up and often disappear when markets crash. Sound familiar? Buying high - selling low? Don't be that guy.

Hopefully, the above will help you

-Control your FOMO -Slow down your trading

-Achieving better results for the future!

I have hope and trust in you that you can become a better investor!

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💚 Invest smarter, not harder—copy my trades and watch your portfolio grow! 🚀

✅2023 - 54.58%

✅2024 - 54.1%

Gabor Fogarasi @fogi70

eToro Popular Investor 🏦

CISI Level3 Investment Certification

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