FOMO

in #cryptocurrency7 years ago (edited)

Anyone who has ever traded cryptocurrencies knows this feeling. It's a sick, deep-seeded emotion... a gut-wrenching feeling that can make a grown man cry like a little girl. That feeling you get when you missed out on a big opportunity and have to watch other people bask in its glory. Of course I am describing FOMO or the Fear Of Missing Out.

Every human has basic emotions and instincts and when participating in risky activities, such as crypto-trading, you have to learn how to distance yourself from them. Investing in any market involves some element of risk and the cryptosphere is the riskiest of all. You can make massive gains overnight or take insane losses in a single instant if you aren't careful. This is where having serious guts comes in handy. Big risks often lead to big rewards but nothing is without a downside in this world.

Initially when you see a particular coin or token showing gains you might be tempted to jump right in to ride the movement upwards. This is where technical analysis comes in handy and I never make a large trade without it. Many casual investors just buy at the current market price which can be hyper-inflated if they aren't paying attention. The smart investor waits for the graph to flat line (consolidate) before putting any real investment into a currency or token. The impatient or greedy investor usually gets burned by buying into the bubble/hype.

This yearning to "be one of the crowd" is the best example of FOMO as nobody likes being left behind. Maybe its just part of our human nature to try and do what the rest of the group is doing but in cryptocurrency trading this is very foolish. Usually by the time the average investor has heard about a particular investment the price is already in the hyperbolic stage. Any experienced buyer will tell you that you should never ever buy into something that is moving hyperbolic because what goes up MUST come down.

Look at Ethereum for example, which spiked up to $1420 USD only to drop back to $600 later. It is now trading around $850 but a LOT of people got burned when they bought in around the $1200level. Those investors will either have to sell at a loss in order to have some liquidity for trading OR hold onto those tokens until the price inevitably goes back up past record high (which could take a year or more). The wise and informed investor would have bought in during the early consolidations around $12, $50, and $90 respectively.

When people see a particular coin start to go bonkers they have a tendency to liquidate their other holdings and jump on the FOMO train. This of course can lead to a downward spiral of profit losses as trading fees and market volatility eat up your capital. Whenever something starts to go up in value quickly, remember that it can come back down just as fast. Even worse is when you discover that the coin you just sold, to bandwagon something else, has gone up tremendously in value.

Do yourself a favor an NEVER trade purely on emotions or on FOMO. The market fluctuates daily and there is always another buying opportunity ahead :) Happy trading and good luck out there!

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I agree with this. Lol nice time stamp " It is now trading around $225", I remember those days like it was just a few months ago.

WTF how did you got 32 dollars?

I wish that dude liked my post aswell haha

Thanks so freaking much! Made my day! :-)

Great Post! Very true.