At some point in their trading journey, every crypto trader experiences the fear of missing out (FOMO). When this feeling creeps up, it can be hard to resist making an impulsive investment decision. This is especially tricky for new traders who haven’t learned much about the crypto market and don’t fully understand how different coin prices will change over time.
Thankfully, the fear of missing out can be managed and overcome by all traders. Understanding what FOMO is and identifying its causes is the first step. Next, you can discover some key ways to avoid FOMO when trading, so you won’t have to experience any losses from making decisions that have been driven by emotion. So, it’s time to learn all about FOMO and how to manage it when trading crypto!
What Is FOMO?
FOMO is an acronym for “fear of missing out”. FOMO affects everyone, even in our everyday lives. Have you ever noticed someone having a positive experience and wishing you could join in? Well, that’s FOMO. This natural feeling dates back to prehistoric times when our survival depended on competition, as typically when you feel like you’re missing out on something, it motivates you to work harder.
When it comes to crypto trading, FOMO can be dangerous. If traders see others profit from a particular investment, then they’ll want to join in to experience the profits too. This leads to traders making impulsive decisions that can lead them with substantial losses. In such a volatile market, making decisions that are driven by emotion rather than logic will only set traders up for failure. However, this doesn’t stop millions of traders every year from giving in to FOMO and making regrettable trading choices.
Even worse, scammers will use FOMO as a tool to trick victims into investing in coins that are part of pump-and-dump schemes. In a pump-and-dump scheme (sometimes called a rug-pull), scammers will invest in a coin before hyping it up through social media to convince other traders to invest too. These scammers will act as if the coin is the best investment decision ever and that it has the potential to make traders rich.
By manufacturing FOMO, scammers can persuade traders to invest in a coin that they wouldn’t have even heard of before. Plenty of hopeful victims will come forward and invest in this coin after hearing or reading that it is a once-in-a-lifetime investment (or something along those lines). After the coin has been ‘pumped up’ and the price has been inflated, scammers will then sell all their holdings and disappear. The coin’s price will then plummet and victims with be left with losses.
How to Manage FOMO When Trading
After becoming aware of FOMO, it’s time to learn how to manage it when trading, so you don’t risk your money with impulsive decisions or fall for crypto scams. Here are a few key ways to avoid the fear of missing out when trading cryptocurrency:
Sign Up for a Crypto Platform
If you believe you need additional guidance when trading, then we suggest using a crypto platform. After signing up, you’ll be connected with a trusted broker who can help you step up your trading game. With this extra support, you can resist impulsive decisions that are driven by FOMO so you have a much better chance of making a long-term profit. Not only this, but you’ll also be provided with various tools, resources, and advice that can help shape you into an experienced and profitable trader.
If this interests you, then you can check out our top recommended crypto platforms – Kraken, KuCoin, and Immediate Edge. All of these platforms are popular in the trading community and are packed with fantastic features that will help you invest with ease. In some cases, you can even use a demo account to practice trading with dummy funds. This allows you to see first-hand how the crypto market works and how different coins fluctuate over time. This can help you to see that although coins may suddenly rise in price, giving into FOMO and investing in them can still leave you with losses.
Create a Strategy and Stick To It
Traders must create a trading strategy before investing money into cryptocurrency. A strategy is helpful in numerous ways, but most of all can help you to manage FOMO. If you intend to stick to goals that you’ve established early on, then you’re less likely to fall for a FOMO trap and invest in a coin that’s suddenly appeared on your radar. In contrast, traders who don’t have a strategy are more likely to invest impulsively in coins that appear to be performing well for a short period of time. After all, trading is about long-term profits and learning to trade with a long-term goal is a key part of managing FOMO.
Do Your Own Research
Before investing in any coin, it’s vital to do plenty of research. This includes checking out the white paper on the coin’s website, reading social media posts that mention the coin, and heading to a crypto marketplace to see how the coin’s price has fluctuated. If don’t research a coin, even if other traders are claiming that it’s a terrific investment, then you’re going in blind and will have no idea how the coin will actually perform. FOMO can make us think that we have to act instantly to avoid missing out, but this usually isn’t the case. It’s much more important to take time researching each coin so that you don’t end up making an irrational trading decision.
Overall, FOMO is a potentially dangerous occurrence in the crypto industry that can result in huge losses for traders. Scammers already understand the power of FOMO and have been using it to their advantage to help pull off pump-and-pump schemes. Luckily, there are ways to manage and overcome FOMO, so you don’t fall into a scammer’s trap or make an otherwise bad investment decision. By creating a long-term strategy, doing plenty of research on each cryptocurrency before investing, and even signing up for a crypto platform, you can reduce your chances of being negatively impacted by FOMO!