What is FOMO?
FOMO is an acronym that stands for the ‘Fear of Missing Out’ on an opportunity, event, or chance to make money.
FOMO originally came from the feeling people had on social media when they saw other people having fun on social media somewhere else and had the feeling of missing out on the event.
In trading and investing FOMO has come to stand for the psychological error of seeing a move in a market that you are not in but have a strong desire and want to get into a trend usually too late. The fear of missing out can make you want to enter a trade outside your trading plan, system, and without a valid signal with the emotional desire to participate in a strong move that you missed out on but is still going on. The fear is that you will completely miss out on a big profitable opportunity so you decide ‘better late than never’ and this is always almost always a mental error.
The best way to combat FOMO is to believe that a current opportunity is just one of next 100 you will have in the future and all you have to do is wait for the next one. The value of an opportunity is found in the timing and if your entry is too late what appears to be a blessing can quickly become a curse.