What Is A FOMO?

If you’re familiar with the crypto space even slightly, you’ve probably heard of the term FOMO. What does it mean? In this article we aim to figure out what it stands for, why it happens, and how it affects trading in the crypto market. Let’s begin!

Definition Of FOMO

FOMO in crypto stands for “Fear Of Missing Out” and is used to describe the anxiety that you may feel if you are not quick enough in making trading decisions. Imagine this: one day you check the charts and see that the coin that you do not own has started going up at a fast pace. At that moment you feel the paranoiac fear of missing the opportunity to buy it cheap before it skyrockets and becomes “the new Bitcoin” — a coin that everyone wants but can’t have. This panic makes you act quickly and put your money into the asset without proper analysis of your decisions, sometimes leading to mistakes and losses.

Don’t think that FOMO is something that only newcomers in crypto experience. Due to its relative youth and absolute unpredictability, the crypto market gets easily influenced by rumors, FUD (Fear, Uncertainty and Doubt), or actions of the whales and influencers. This impact may trigger a massive FOMO, which often spreads like a wildfire, touching everyone with no exception. So, however long you’ve been into crypto, you still have to remember to watch out for it.

How Does FOMO Affect Trading?

As we said, FOMO heavily impacts trading by driving impulsive and often irrational decisions. Here are some of the most common factors that FOMO leads to:

1. Overtrading: FOMO pushes investors to make a high volume of trades in a short period of time, trying to capitalize on every perceived opportunity. This often results in higher transaction costs and substantial loss of capital.

2. Chasing prices: the upward price momentum that gets people to buy the assets in hopes to capitalize when it grows more might actually be already near its peak. It may lead to potential losses once the price corrects.

3. Risk of running into scammers: FOMO can be exploited by market manipulators who create hype around certain assets to drive up the price, knowing that fear and greed will push inexperienced traders to buy it at inflated prices.

4. Thinking short-term: FOMO encourages traders to focus on immediate gains rather than long-term investments. This also exposes them to fraudulent schemes and unreliable strategies, leading to losses.

How To Deal With FOMO?

So, now you know what FOMO is, but what if it happens to you? Here’s a list of things you should do to deal with or avoid it:

• Do your research. Learn the market thoroughly to make reasonable decisions. Trust the tech analysis and charts from reputable sources.

• Stick to your trading plan. Determine your profit goals, risk tolerance, and entry and exit points before trading. Don’t deviate from your strategy, even if emotions urge you to act impulsively.

• Avoid social media and hype. Consider limiting your exposure to social media, forums, and news or muting discussions that may create unnecessary pressure. Avoid making decisions based on crowd behavior.

• Consult with the specialist. Talk to the professional financial advisor who can help to analyze the market and come up with a perfect strategy so you have a solid plan.

So, fear of missing out can lead to impulsive and irrational trading decisions, especially in the volatile crypto market. Understand that it's impossible to catch every market movement and profit from every opportunity. Don’t feel pressured to trade simply because others are. Step back and reassess before entering a trade just because it seems like everyone else is doing it.

What do you think of FOMO? Have you ever experienced it? Why did it happen? Let’s discuss it in the comments below!