FOMO syndrome in Price Action

FOMO syndrome in Priceaction priceactionteam jabalameli

FOMO syndrome stands for “fear of missing out” that happens to most of us. Due to some inherent characteristics of trading markets, FOMO is becoming more and more visible in this professional field. In general, fear of missing out or FOMO is typical for both – those, who have just started trading in the market and those, who have been trading for a long time.

Let’s imagine a situation, when a market movement starts with a big candle. Most people cannot overcome their fear and cannot even wait for that candle to close. They may justify themselves to be optimistic or even go to the time frame below and see a candle closed there, so they enter the trade, but immediately the price movement returns and becomes a shadow.

For example, in stock markets that have buying and selling queues, many traders may constantly change their minds and jump from one queue to another queue. Such people usually ignore their logic and make emotional decisions as they are afraid of being left out of the market and afraid of missing their positions.

Warren Buffett: Trends are formed where noone expects.

Institutional traders never do 2 following things:

  1. They do not enter the market suddenly and clearly, so that other traders know about their presence, as it may lead to getting less trading volume.
  2. They do not trade at a worse price.

Due to these 2 reasons, smaller candlesticks usually represent the entry of great traders at the beginning of a movement.

How to cope with FOMO syndrome

For coping with FOMO syndrome we need to talk to a psychotherapist or choose an observer for the trades. The observer has to be a person, who is familiar with the method of a particular trader, knowing how all the entry and exit points and trends are checked and understanding the particular trader’s problems to find proper solutions.

In other words, when a trader tries to make an excuse to enter the market after an emotional event and wants to break the predetermined rules, the observer should inform that trader about a possible issue and help calm the mind down.

It should be noted that recording such cases in the trading journal and clarifying the outcome can have a positive impact on the trader.

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