Why Fear of Missing Out is Your Trading Worst Enemy.

I did not pay much attention to the word FOMO when I heard it for the first time. I later on learnt that FOMO is an acronym Fear of Missing Out. It is that powerful emotion that comes about when you think that people are earning money off an opportunity and you do not want to be left out. FOMO is extremely harmful in trading since it can cause you to lose all your plans, all your strategies, and even your common sense.

Trading, be it in stocks, forex and cryptocurrency is not about buying and selling. It is concerning discipline, patience and control of emotions. In Nigeria, however, I have witnessed numerous individuals and myself at one time or another who have allowed the feeling of missing out to drive their choices. This fear does not permit you to wait till the right time. It urges you to dive into a trade because you are scared that otherwise, the money will be made by another and you will not be earning the money.

I recall that one day a certain group of Nigerian Telegram was screaming about a coin. It was all everybody said it was going to blow. The messages were falling at the rate of one a second, and I was able to see the screenshots of people who said that they already earned 200 percent profit. I was not ready to purchase such a coin. I had no strategy, no analysis and I had never even read about the project. However, due to FOMO, I acted to purchase. The next day the price had plummeted. My money was stuck. It was the day when I got to know that fear of missing out is not a minor issue but the bane of the traders.

The initial reason why FOMO is so harmful in trading is that it makes you blind in doing proper research. A trader is also expected to watch charts, learn the trend and know the reason why he or she is buying or selling. But when you are affected by FOMO, you do not check anything. You just follow the crowd. And the thing is, that, most of the time when the crowd is screaming it is too late. Profit makers had purchased well before the music began. The people who tend to turn up at the nick of the time are the losers.

The second reason why FOMO is a bad enemy is that it kills discipline. Every honest trader is aware about the discipline. You ought to have access points, exit points and risk management regulations. But FOMO does not bother about rules. It tells you in your ear, you will never have the opportunity of your life, unless you buy now. And rather than wait to jump at your entry point, you jump in. You are not placing your stop loss, you are just telling yourself that it will continue to go higher. Eventually, you go against your own rules and your account becomes a casualty.

The other painful aspect of FOMO is that it can influence you to make trades that you are not financially prepared to make. Suppose you were just going to trade N20,000 that week and you see all the people talking of a hot opportunity. The stress will encourage you to borrow capital or to spend your savings, so that you do not lag behind. This is whereby most citizens of Nigeria find themselves in debt due to trading. They take loans through friends and even borrow having the impression that the market will repay within a short period. As the market goes against them, they are left with losses and shame.

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Unnecessary and unjustified stress and anxiety are the result of FOMO too. Selling is already risky as such. It is even worse with the addition of fear of missing out. You fail to sleep properly as you constantly check your phone. You are not able to concentrate on your job as you are monitoring the market throughout the day. And when the trade works against you your heart leaps up and you panic. Others even get ill due to this sort of pressure. All of that is the result of the lack of control over emotions.

The fact is, the opportunity in trading will never go away. Lagos traffic is similar to the market--it has no end. Today has a prospect of its getting one coin or stock, tomorrow it will have the chance of another. But when FOMO has a hold on you, you believe that every opportunity is your only opportunity. This is the reason why merchants lose money repeatedly.

I have also observed that most novices in Nigeria are more prone to this than the seasoned traders. The reason is that novices are normally keen on getting quick cash. They become members of social media and follow the hype and desire to become big overnight with a little cash. But some traders know that when one opportunity is missed, it does not mean that the end of the world. They understand that it is consistency, rather than luck.

Then what do we do about the experience of fear of missing out? The first step is awareness. You have to acknowledge that FOMO is a thing and it will destroy you unless you manage to control it. The second one is to plan always. Before venturing into any business, you must understand the purpose of entering into business, the amount of risk you are willing to take and when you are going to exit business. In case the trade is not to your conditions, then get out. The third step is patience. Businesses will never be lost. Market is not owned by an individual. You may miss to-day and see to-morrow, but then you must have clear eyes and composed feelings.

Trading by the close of every day is not about the market but it is a matter of control. No one can guess at the market 100%. You can tell what you will do, however, when you are disciplined. FOMO is like a voice in your ear, deceiving you. It causes you to believe that you are losing when on the contrary, you are saving yourself more trouble.