When you become a trader, one of the major issues you will have to address is FOMO, the Fear of Missing Out. It is something that can influence your trading decisions in the wrong way. It can cause you to jump into a trade too early or cause you to close a winner too soon. Besides that, it might lead to you risking too much since you are not patient about growing your account.
What Causes FOMO?
Part of the journey to become a trader is to understand the main cause of FOMO. There are various causes:
When you are not ready to wait for setup and you just want to jump into a trade since you fear the price might run away.
• Lack of Long Term Perspective
You fail to understand that there will be many more trading opportunities in the future. As such, when you get funded account you put too much emphasis on a single trade. You develop tunnel vision and try to force a win.
• Unrealistic Expectations
Once you receive funding for traders, you might try to double it in a month. It makes you feel like you are missing out if you do not make a lot soon. This leads you to take unrealistic risks with large amounts.
• Lack of Rules
If you do not have a system of rules in place, this is the start of FOMO as a default mode. You will find yourself jumping in an out of trades and not really having any direction.
• Lacking Confidence
After you make a few wrong trades, you might try to play catch up by entering into random trades once you get funded account. Your hope is that one of them will turn out lucky.
It will not happen in a day if you have FOMO. However, there are ways to get over it once you receive funding for traders.
Ways of Overcoming FOMO
There are a few very specific tips and concepts that can help you deal with FOMO in a better way:
• Have Rules and Filters
Firstly, you need to create a solid trading system. The system will have rules for exits, entries, stops, and risk management. Rules ensure that you are consistent when you trade.
• Avoid Mid-Candle Actions
Only make decisions when a candle is fully closed instead of in the middle of a trade. Mid-candle actions are usually driven by FOMO, even when you cannot recognize it.
• Understand the Impact of Your System and Timeframe
It is important to understand the timeframe in which you trade. For instance, understand how many trades per day or per week you are expecting to make. Besides that, you must learn how to backtest your numbers. It will give you the confidence to know your system works.
Have Some Self Respect
At the end of it all, you will need to understand that there are no shortcuts to success. Everyone knows in the back of their mind what they need to do but ignore it. Success means developing self-respect for what you know to be true and doing it.