Feelings of anxiety or fear of a person missing out on a very lucrative and productive venture cannot be ignored when making an investment decision. Hence, it is expedient to properly understand what FOMO is all about and the possible ways to deal with it.
FOMO insinuates a feeling of anxiety or basically the idea of being left out from a positive or unique business experience that other people are leveraging, as it means “Fear of Missing Out” in full.
This usually happens with trending reviews and marketing content with promising rewards on products or business ventures that often leave people with the feeling of possibly missing out on a life-changing experience.
Speaking of the financial market where primary activities involve trading and investing, FOMO is apparently the feeling of fear that comes upon a trader or investor that leaves them with the thought of missing out on a potentially lucrative investment or trading opportunity. This feeling is more likely to prevail when there is a significant spike in the price of an asset over a relatively short period.
Let’s dive further to get a full grasp of what it is all about and how to deal with it in situations when it takes over the mind and poses one to making risks that could result in financial losses.
As said earlier, FOMO means “Fear of Missing Out”. It is a feeling of anxiety or most likely the fear of being absent from a positive or unique business experience that seems to be impacting others positively.
Even in the crypto market, the concept of it cannot be overemphasized as emotions like this are often geared when there is a new trending asset in the market, or most often when there are strong price fluctuations, usually when the market is bullish.
It triggers a person into ignoring the necessary strategic planning he/she is supposed to make before making an investment or proceeding with a trade, thereby making the call on the basis of emotions. Sometimes, the rise and fall of a given market can be traced down to FOMO.
Inarguably, this feeling makes a person vulnerable to making an investment decision on the basis of emotion which revolves around the fear of missing out. However, it is likened to being an unworthy risk as there are lots of tendencies that the call will most likely result in regrets.
Brief History of FOMO
The phrase surfaced in 2000 when it was first described in an academic paper entitled “The Journal of Brand Management” by Dr. Dan Herman. A few years later, the acronym was coined by Patrick McGinnis in an opinion piece published in 2004 in the American magazine “The Harbus.”
The phrase is more of a personal thing, but it has become a common term in the financial market after experts realized its significant impact on the market.
Benefits of FOMO in Crypto Trading
Crypto investors and traders often get to feel the fear of missing out on a productive opportunity usually when they see a bull rally in a coin or token they are yet to acquire.
As said earlier, the feeling usually prevails when a cryptocurrency rises in value significantly over a relatively short period of time. There are possibilities that the FOMO feeling will drive a trader into leveraging the opportunity of making a good trade out of it. Thus, this means that it also provides some benefits in crypto trading.
One of the undeniable benefits of FOMO in crypto trading is that the sentiment iterated among the feeling of fear of missing out on a trending asset is most likely to cause a pretty acceleration in the price of the asset, hence giving traders and investors the opportunity to make profits.
This also means that it is capable of providing favorable buying and selling opportunities for traders and investors. If properly leveraged, the imagination of missing out on something that seems to be providing others with great experience could turn into a reality of becoming a partaker of that great experience.
Furthermore, FOMO is beneficial to crypto trading as it often acts as a good guideline for traders, offering them a good trading experience driven by FOMO.
Side Effects of FOMO
In as much as FOMO could yield certain benefits to traders and investors, it has often proven to not be ideal. Thus, succumbing to the feeling of FOMO in trading and investment practices could lead to tremendous consequences.
Therefore, the effect of FOMO on finances often turns out negative especially when it comes to trading or investing under its influence. As it sees people having to irrationally think when they are at the crossroads of making important financial decisions. Hence, they end up making unreasonable decisions which could lead to a significant loss of funds. Also, traders are most likely to end up making unreasonable trades.
How to Overcome FOMO
The truth is that dealing with FOMO usually at certain critical crossroads may not be easy, but the good news is that it is possible to avoid and temporarily overcome it in the long run.
First of all, it is important to be aware of FOMO and be very certain that emotion is not the factor influencing your proposed move. The feeling is avoidable but it has to be detected first. One has to be certain that he/she is not being swayed by the hype surrounding an asset.
However, when it seems that one is being overwhelmed by the feeling and fear of missing out, it is important to bear in mind that you are not alone as there are other people yet to share in that promising yet uncertain experience and understand that missing out is not a problem so try to be cool with it and don’t allow it eat you up.
This leads to the most important step that requires one to make good and quality research in order to properly decide what to do with the FOMO. It helps one to decide if the asset is worth the hype and if it is worth a try. This plays a major role in helping a person make logical and reasonable decisions instead of sentiments.
Understanding what FOMO is all about is very important for all investors and traders. Crypto enthusiasts are not an exemption either. While learning the positive and negative effects of FOMO, it is crucial to understand how to deal with it so as not to end up falling on the unlucky side.
Investors and traders should ensure that they are making important financial decisions from appropriate logic and reasoning, FOMO could play a part in a proposed decision but it is not ideal to make it the major backup to a supposed move.
However, the practice of diversification would help a great deal from falling into the whole woes of FOMO.