FOMO is an acronym for fear of missing out. The FOMO trader thinks that this trade could be the one and if I miss this trade there may not be an opportunity like this one. Of course, there's going to be more opportunity around the corner but although it sounds silly and obvious the reality is that this type of thinking affects so many traders mainly because they don't even realize it's affecting them and it is a huge problem because it can cause you to do 2 things.
- to take every trade you see even if it' is not that good of a trade setup.
- to increase your position size on a particular trade because if this trade does end up being right then why would you only want to make a few hundred or a few thousand bucks on it.
But what happens when this trade turns into a losing trade and now you have tons of your capital invested and are sitting on a huge loss that will be almost impossible to come back from. This can be a huge problem. If this fear of missing out is something you struggle with then here is my solution for you.