How to Deal With FOMO in Trading

When markets slow down and traders find fewer opportunities for high probability setups behind our system, most traders take unnecessary losses on trades that should have been avoided.  

Austin and Rylee sit down to discuss how to handle slow markets best, how to tame the inner FOMO that we all feel during these periods, and what you can do differently to avoid taking unnecessary losses going forward.

We are in October now, which tends to be a slower trading month especially if you are trading with the ASFX edge.
Austin says,

“It has been so great seeing how the VIP group has evolved over the last two years as more and more traders are saying no to less probable trades instead of taking unnecessary ones.”

Steve Burns has said,

“A good trading mentor will tell you to be patient” and I have always said, “it’s important to sit on your hands and not force trades.”

So, even though we know it’s better for our trading account to wait for trades that fit our edge, why is it that it is so hard to NOT jump into bad trades?

What is FOMO (fear of missing out)? 

Even outside of trading, what is FOMO?

What comes first? Thoughts or emotions?

Rylee says that emotions come first because your subconscious is what allows you to feel and then the outer layer of your brain (non-scientific Rylee term) is where you put words to that emotion you are feeling.

FOMO is an emotion. 

Fear is an emotion. 

Fear is the first word in FOMO.

So, you need to be aware of this feeling before you can self correct it. Awareness is always the first step in dealing with FOMO in your trading.

Fear can come from so many different places. 

Where does FOMO come from?

Specifically related to trading, FOMO could come from other people. For example, if a trader is being patient and not experiencing FOMO and then all of the sudden they are experiencing FOMO, it’s because they are looking at what everyone else is doing. Whether it’s on social media, youtube, a group chat etc. 

Comparison is what creates that fear.

The comparison against other traders and their results is what creates fear.

Two other origins of FOMO are the fear of losing money and people don’t want to be wrong.

People tend to attach their own personality and ego to their ideas on the chart and make it a representation of who they are as a person, and they don’t want to be wrong.

Let’s be clear about one thing, trading is a business, it’s not who you are.

We are conditioned from the beginning of time that failing is bad. When we were young and in school, we were taught that failure is when you’re bad. Fail a test? You’re bad!

This is simply not true and needs to be a corrected method of thought. 

Failure is when you’re learning and growing.

You are not bad if you fail, you are simply presented with an opportunity to evolve.

You need to be confident in yourself and your trading system when comparing yourself to other people. It is unhealthy when you lack confidence and don’t have the ability to put your foot down when looking at other traders. 

However, that confidence will get washed out by fear if you’re not aware of these thoughts.

FOMO and Social Media

It is imperative to learn how to control FOMO when comparing yourself to others on social media.

Social media is the King of comparisons.

This is a tough line to walk because there’s also so much good content and value on social media.

On the other hand, the problem of social media is you’re only seeing a certain image that they’re projecting and now you’re feeling self-critical.

How to Fight FOMO and Social Media

“What’s the way to pull yourself out of it?”

Start by asking yourself,

“What am I consuming?”

Ask yourself what you’re gaining from watching or following a specific person on social media. If it’s not something that makes you feel good on the inside, unfollow them.

Most people are very active on social media, but it’s so crucial to be so careful about what you consume.

FOMO is self-inflicted because you’re following accounts that make you feel like you’re missing out. You see a tiny snippet of someone’s life or a picture of a fancy car and suddenly that feeling of FOMO has been created in your mind.

How do I deal with FOMO in my trading?

Let’s start by saying there isn’t only one answer. 

Traders experiencing FOMO are looking at everyone else instead of building their own confidence.

One simple step that traders can implement to build their own confidence and fight FOMO is writing their trading plan out and having it physically in front of them, which makes it less emotional and makes it black and white. This will build confidence in their systems and, eventually, in their own trading abilities. 

Austin, for instance, has the ability to read the charts like a story even when he’s not actively trading. If other traders could do this, it would help with their FOMO and build their confidence because they could say, “Hey, I’m reading this chart like a story. I understand what it’s telling me so I know that I’m ok with sitting on my hands right now.” 

This confidence and ability to read the charts like a story definitely comes through confidence in a trading system.

It also comes from reacting from what has happened on the charts instead of forecasting. 

This helps with FOMO because it’s a much more disciplined way of trading and makes it so you’re aware if you’re going against the trading plan you’ve implemented. 

Locking into a specific plan, building resilience to generate ideas and picking from the best options, and instilling confidence in yourself will help you even just notice FOMO.

You don’t have to FIGHT FOMO, just recognize it. Again, awareness is always the first step.

Another piece of advice for traders to build confidence and fight FOMO is to mark-up your charts! Do it again and again!

FOMO and Money

FOMO is also very prevalent in the mindset surrounding money. People are so afraid of money. Money is so attached to an individual because bills have to be paid, you have to eat and you have to live.

If you’re so attached to your money, get another job and generate more income before you put all of your eggs in your basket with trading because it creates fear. The fear of losing your money forces unnecessary trades, too many trades and over-leveraging.

It is imperative to recognize this so you can identify and deal with FOMO in your trading.

Moving Forward and Dealing with your FOMO

People look on social media and see all of these flashy posts, Lamborghinis and money and are afraid they’re missing out on making huge amounts of money so they jump into trading and want instant money. When that doesn’t happen (and it won’t happen) they feel like they’re missing out even more and try to make up the money by trading more; it’s a vicious cycle.

Social media and FOMO in trading are intertwined as we can see by examining people’s tendencies of looking online and seeing flashy pictures or small snippets, comparing, creating FOMO, putting money into a trading account, chasing money and trades for instant gratification, losing money and then trying to make up the money lost.

It all starts with comparing yourself to someone. Imagine if your FOMO has been created from a photo that’s been photoshopped, how horrible would that feeling be?

Where you spend your time (aka social media) should be valuable and build you up instead of creating fear.

Purge your accounts, follow people who build you up and provide value, learn and practice with a trading system, write your trading plan down, practice, practice, practice, build confidence and deal with the FOMO in your trading.