«FOMO» syndrome - what it is and how to deal with it
- VFX Blog
- For beginners
The emotional state of a stock trader is always the most important factor influencing financial results. One of the most common and most insidious psychological problems in the process of learns a binary options trading is FOMO syndrome. Many people suffer huge losses due to the consequences of its manifestation. What is this problem and how to act when it appears, read our article.
What does this mean?
FOMO in trading can appear for a trader, especially a beginner, as often as an opportunity for profit. The abbreviation stands for "Fear Of Missing Out" - "fear of missing an important event" or "lost profit syndrome." In the materials on exchange psychology and binary trading, the definition appeared recently, although in the professional environment it has been known since the emergence of trading as the main activity.
Just as technical analysis has its patterns when forming a trend, certain behavioral patterns can be traced in human psychology. The better a person understands their character and motives, the more tools they have to work without emotions, which gives them additional profit.
Let's look at the main phases of this psychological «trap»:
From the picture, you can immediately see that the main prerequisite for the appearance of FOMO is incorrect analysis and selection of the wrong entry point. This is common for beginners.
The problem of FOMO is psychological, manifests itself in a personal attitude towards oneself. For example, after an unsuccessfully closed position, a trader analyzes the chart and after the fact sees a missed opportunity. Another manifestation of the problem is the feeling that others are more successful. To appear successful, many avoid disclosing their losses. And appear more talented to others. Beginners will strive to trade as profitably that inexperience will lead to mistakes in the form of a loss on the account.
Emotional FOMO can be expressed in:
No emotion will lead to long-term profit. It is important to be as limited as possible in these manifestations. Traders under the influence of FOMO show similar behaviors, psychologists highlight the following main statements:
• "Everyone does it, it won't be bad". Blindly following the crowd or binary option robot can lead to a significant loss on the account. You need painstaking analysis and serious reasons for opening an option.
• "I can make so much money!". Trading with a groundless expectation of profit rarely leads to profit. No one knows when even the strongest trend situation will end. Therefore, you need to know the best time to enter and compare it with the current situation and live trading signals. Be sure to have the necessary protective strategies to prevent losses.
• "I think I'll try this signal or strategy". Such groundless indecision cannot be the reason for opening an order.
• "They must know something I don't". Maybe, but these insights can't last forever. If a movement has occurred for no particular reason, it means that soon it will either be confirmed in the news or economic indicators, or there is an adjustment to the closing of volume positions of market makers.
• "I needed to know this was going to happen". Self-flagellation after receiving a loss. It speaks about the absence of a working binary option strategy in terms of testing on historical data.
• "I'm afraid to miss a big opportunity". This is a direct consequence of the lack of a vision of the market Experienced player with clear rules of action for open options.
• "The Japanese yen (pound, euro, dollar, Bitcoin, Litecoin, etc.) is a pretty safe option, I will invest in it". The statement itself is true for every asset, but in no way indicates the best moment to open.