FOMO stands for Fear-of-Missing-Out, one of the worst financial advisors ever. This type of fear, apart from making the life of many people miserable, leads to committing serious mistakes. That is doubly true when we talk about crypto. In this article, we are going to share some tips helping reduce or avoid FOMO in crypto trading and investing.
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What Is FOMO in Crypto Trading
Though FOMO is widely associated with crypto and Bitcoin, there is nothing modern about it. As most fears, FOMO roots in the prehistoric times when it helped humans survive and evolve through competition. Ideally, the irritation you feel when you see your neighbor enjoying the things you missed, should be motivating. The anxiety caused by understanding that we are performing worse than we could, drives us to work harder.
But in today’s reality, FOMO often poisons our existence and makes us fall victim to scammers. Thus, the once important survival tool ruins our wealth and negatively affects the quality of our lives.
To break this pattern, we should be able to identify our Fear-of-Missing-Out.
As FOMO in crypto trading and investing has reached epic proportions, we will focus on these two sectors.
FOMO in Crypto Trading and Investing: Why the Problem Is Big
First, let’s explain why this emotion has become a major force on the crypto market. There are several reasons for it.
- The cryptocurrency market provides some fresh breathtaking examples of people getting enormously rich just because they grabbed an opportunity to buy the right coin at an early stage. The biggest success stories are related to Bitcoin and Ethereum, the leaders of the market.
- People are already well aware that crypto and blockchain have good potential. Though many of us missed the Bitcoin train, there is still a chance to invest in a coin that will grow big within a short period. No one wants to miss it out.
- Cryptocurrency market is still very young and unstable. It means the price of most coins largely depends on how many people believe in their potential. Therefore, sudden changes in the market mood make prices rise and drop significantly, creating what you may see as an opportunity to get rich quickly and easily. Indeed, if you don’t miss the right moment to buy and sell, your gains can be impressive.
- Crypto investing and trading has become popular, as the barrier to entry is rather low. As a result, many new investors and traders lack relevant experience and education. Instead, they follow their dream. It is easy for scammers to cheat these people out of their savings, by playing on their FOMO.
- So far, FOMO is one of the biggest reasons people trade cryptos or invest in them. It’s similar to the gold rush when a lot of fortune-seekers started to mine gold. Only this time the gold is digital.
How to Identify FOMO: Basic Symptoms
You are probably a FOMO trader if you often tell yourself the following things:
- So many people are buying this coin. They cannot all be wrong — there must be something to it.
- It would be silly not to try. Let’s see how much money I could make.
- I should have guessed the price would rise!
- These people who buy this coin… They must know something I don’t.
- If the coin will grow big, I will never forgive myself for missing this opportunity.
As you see, FOMO traders tend to follow the crowd and make decisions based on greed and guessing. Just like the gold-diggers of the past.
How to Overcome FOMO In Crypto Trading and Investing
Once you have identified the problem, let’s see how to deal with it. Below are 8 tips that might help you keep your money safe — and restore peace of mind.
Tip 1: Disconnect
It’s one of the simplest ways to get rid of FOMO or reduce it. Recently, you have been spending too much on cryptos in the hope one day they will go “to the moon”? Then you probably need a mental detox. Try stepping aside for a while and doing other interesting things.
Remind yourself that life is not limited to making money and securing your future. Shift your focus to the present: play a game, do a workout, or join your friends for a short trip. Slowing down helps overcome anxiety pushing you to act asap (and make mistakes).
Tip 2: Realize That Losing Is Part of the Game
To control your Fear-of Missing-Out, you should realize that there is nothing tragic or shameful in losing an opportunity now and then. Actually, it’s part of any trader’s experience, especially if you are a beginner.
You should also understand that, though most traders prefer to share their success stories and keep quiet about their losses, they all have lost money, too. In this market, it’s rather hard to predict what will happen to the price tomorrow. Therefore, losses are inevitable.
All you can do to minimize them by sticking to your trading strategy.
Tip 3: See Statistics to Get the Real Picture
The stories of BTC and ETH stir the imagination of many inexperienced traders and investors. Therefore, every coin that markets itself as “a new Bitcoin” looks like a unique opportunity to create wealth.
All you need is a good dose of reality. For it, see some statistics to realize that for every BTC or ETH, there are hundreds of shitcoins. Each of them pretends to be revolutionary or innovative to attract FOMO-driven investors. That doesn’t change the fact that 80% of ICOs were scams.
Tip 4: Remember That Your Subconscious May Be Wrong
Many beginners tend to listen to their guts and not brains when it comes to money-making. If you have “a feeling” about some coin, resist the urge to buy it immediately. Sometimes our well-meaning subconscious hijacks our reality and forces us to make poor decisions. As we have already mentioned, FOMO is a basic instinct, too.
In a way, it’s similar to dieting. To become healthier, you should follow your nutrition plan instead of listening to your body. That probably says “I am sure this doughnut will make me feel much, much better”.
Tip 5: Explore the Cases When People Lost Everything Due to FOMO
Instead of concentrating on success stories (that occur less frequently than you think), use Google to know more about the cases of major losses. Join a trading community and ask the members to share their negative experiences. Read more about the ICO boom in the wake of Bitcoin’s enormous price rise and its consequences.
This research may be eye-opening. You will see that the success stories stirring your FOMO are just the bright tip of the crypto iceberg. The size of its underwater part is difficult to assess, but it’s much, much bigger.
Tip 6: Read About FOMO-Based Scams
One of the famous types of scams playing on FOMO is the pump-and-dump scheme. Long story short, the group behind the scheme makes the price of some shitcoin rise sharply. It attracts many FOMO traders who believe they have spotted the “next big thing”. When the price reaches a certain mark, the scammers sell their coins and make multiple gains, at the expense of other players. If you want to know more about how it works, we have a special article about the pump-and-dump scam.
Unfortunately, scammers use many tricks to cheat people out of their money. In most cases, they exploit their fear-of-missing-out to reach this goal. Being aware of this fact helps avoid many honey-traps.
Tip 7: Realize That “What Ifs” Will Take You Nowhere
Many people who are afraid to miss the next big thing, cannot forgive themselves for not buying Bitcoin or Ether at a low price. They keep thinking of how rich they would be if they had identified this opportunity. As a result, they try to correct this mistake again and again.
To break this destructive pattern, remind yourself that thinking about what could have happened is a total waste of time. By the way, among the world’s top Bitcoin millionaires and billionaires, there were few random people. Mostly, these early investors had a background in finance, fintech, or programming. In its younger days, cryptocurrency was widely seen as a financial tool for geeks, too complicated for an average user.
Therefore, for many guys who now regret they didn’t buy bitcoins in 2011, the barrier to entry was actually too high. Even if they had bought or mined some bitcoins back then, they would have probably spent them on a pizza. Or would have sold them when the price reached $100.
In that light, it would be wiser to stop asking “what if” and start educating themselves. The more you know about crypto investing and trading, the easier it will be to spot the coins that have real value.
Tip 8: Analyse the Mistakes You’ve Made Due to FOMO
Every FOMO trader has a history of failures he or she prefers to ignore. We recommend you to revise this history to understand that FOMO is responsible for losing (and not earning) a lot of money. As any deeply-rooted fear, it makes us act fast and without thinking.
Unless you are running from a tiger, it normally makes things worse.
FOMO in Crypto Trading: Final Thoughts
To get rid of FOMO, we recommend you to acquire a strong knowledge of the crypto market and explore all its pros, cons, and pitfalls. Also, be aware of how your instincts may let you down when it comes to complicated things.
Hopefully, these 8 tips will help you control your FOMO, the king of emotional trading.