Trader psychology has a big influence in forex trading. If you can't manage it, then you can experience FOMO in very dangerous trading.
Successful trading is influenced by many factors. However, the trader's own psychology is the most influential. One of them is excessive fear. That is what is called Fear Of Missing Out or FOMO for short. What are the symptoms? Is FOMO in trading very dangerous? And how to solve it? Check out his further review below.
Meaning of FOMO in Forex Trading
In trading, FOMO is the fear of missing out on profits. Traders who experience it, feel excessive anxiety if they miss money in trading. For example, just because they are afraid of not getting a profit, traders quickly open positions even though the price trend has already strengthened or has even shown signs of slowing down.
They do it beyond reasonable limits and do not think long. Trading knowledge also does not apply to FOMO "suffering" traders. They just want to make transactions immediately in order to immediately get a profit. FOMO conditions also apply when trading stocks, forex, and crypto.
Therefore, traders who are attacked by FOMO can be said to be in a dangerous position. Why? They actually can't control their own emotions. As a result, the outside environment actually affects traders when trading. In fact, all the pros and cons of trading are borne by the trader himself, not someone else.
Symptoms of FOMO
When asked what causes FOMO symptoms in trading, the answer is very simple: human nature itself. Actually, humans are gifted with logic to think. However, it all comes back to the individual. If you are not able to control yourself, then outside factors have a great chance to affect emotions when trading.
Especially nowadays, everyone can get information easily. Traders who are easily influenced are certainly "hit by the FOMO virus" faster. For example, when a trader sees prices that continue to increase on the chart or in the chats of members in the online trading community, he will immediately think that this opportunity cannot be missed. Finally, he placed the order as quickly as possible without thinking about what happened next.
The fear of being left behind in order to gain an advantage also "takes hold" of the mind. They ignore rational thoughts and trading strategies that may have been previously prepared, because there is a sense of impatience and anxiety that continues to haunt the trader's mind.
Is FOMO Dangerous?
It must be dangerous. Especially for the traders themselves. Why is that? Because in trading, prices may not experience continuous strengthening or decreasing. As is generally known, prices in forex trading are volatile. Nothing is certain, prices can fluctuate in seconds.
If the price goes up, the trader will definitely feel happy because he gets a profit. Well, it's different if the price continues to fall after the trader buys at a high price position, of course they immediately lose big. Traders who experience FOMO in trading tend to take high-risk positions because of this. As a result, regret comes later.
Of course, the impact of FOMO does not stop there. Traders who experience losses will be affected by their trading mentality. Those who are unable to face the sad reality, can lead to stress and depression.
As reported in The Nottingham Post, FOMO in forex trading also results in bad social relations among traders. For example, when a trader is too busy with trading so as not to miss out on getting profits, there is automatically no time to socialize with people around him.
To be sure, FOMO is very dangerous. The impact is not only as described above. However, FOMO can also spread to other things that may be worse. Therefore, preventive measures are needed so as not to be attacked by FOMO symptoms in forex trading.
How to Anticipate FOMO
Generally, traders who experience FOMO are those who do not have a solid trading strategy. Therefore, preparing yourself by keeping a trading journal is considered very important before making a transaction. The strategy aims to simplify the process of traders during their plunge in the trading market.
If there is thorough preparation with a trading journal, it is easier for traders to face all kinds of risks that occur later. Traders can also take advantage of automated order systems, such as Buy Limit, Buy Stop, Sell Limit, and Sell Stop. This system can help traders not to be too "frivolous" or FOMO in forex trading.
While trading, don't forget to set aside a short break. For example, take a short break with coffee and light exercise. Such relaxation can help refresh the trader's mind before returning to the trading market. Traders will find it much easier to strategize in a trading journal.
In addition to compiling a trading plan, traders also need to be smart about controlling themselves. Discipline must be built strongly for self-management. Traders should know that forex trading requires right decisions, timeliness, and risk management. Therefore, discipline is very important to avoid FOMO when trading.
Next is to master the science of trading well. FOMO often attacks beginner traders because they do not have strong knowledge and mature experience. Therefore, traders must continue to learn and learn forex trading. There is nothing wrong with traders adding knowledge from people who are already professionals in trading. Not only adding insight, it can also be used to build socialization.
FOMO in forex trading becomes very dangerous if the trader cannot be handled properly. Start thinking rationally that all kinds of risks and results in trading will be borne by yourself. Even if you experience a loss, be sure to set the loss limit according to your risk tolerance standard.
