FOMO, the crypto investor’s worst enemy – 10 rules to better fight it

FOMO is one of the many phenomena that investors and traders of all kinds are regularly confronted with, whether in bitcoins and other cryptocurrencies, as well as in more traditional investment. In a few years, however, this term has taken on its full meaning with the rise of cryptos and the massive arrival of a new wave of investors. Overview of a syndrome that is as well known as it is poorly controlled.

What is FOMO?

the FOMO is the acronym for “Fear of Missing Out”to know the fear, anguish experienced with the idea of miss an opportunityto miss something.

This phenomenon, which was identified many years ago, owes its true development to the advent of the Internet and social networks. Access to information is increased tenfoldgiving us the possibility to know everything at all times.

This is obviously not without consequences: our mind finds it difficult to cope with all the demands it faces. Our judgment is impaired and our frustration is constantly tested.

If many aspects of our lives today are affected by the FOMOthe latter takes on particular meaning when one is interested in investment and cryptocurrency trading. Who has never, for example, monitored the course of a altcoinwaited before investing, saw a 10% increase and regretted this missed opportunity?

This close connection between FOMO and the cryptocurrency market is due to many reasons:

  • The price of cryptocurrencies has exploded in recent years.
  • The ecosystem is in full growth and new trends are constantly emerging.
  • The success stories and others record gains are commonplace on the Internet.
  • Many inexperienced investors discover trading through cryptocurrencies.
  • The first gateways to the sector are the social networks and their influencers.

Thus, overwhelmed with ever-increasing information and requests, cryptocurrency enthusiasts are constantly in regret and experience the feeling of missing out on a golden opportunity, an investment or a potentially lucrative trade.

A phenomenon that can hide many hazards

Why guard against FOMO?

Because of its intrinsic definition, you now understand that undergoing the FOMO undermines our mental health. But the real danger in investing and trading lies above all in the fact of succumb to FOMO.

To succumb to FOMO is to put yourself in danger by basing your investments on the basis of your feelingsof yours temptations. It is to abandon all reflection and strategy in favor of primary emotions most often irrational and deceptive. It’s acting by relying on these phrases that constantly resonate in your head: “I could have earned more”, “I knew it was going to continue to rise”, “this time I feel good”.

These emotions are however the worst enemies of the investor and the trader. They make it impossible for you to take the minimum precautions to ensure that your investment presents a positive expectation of gain.

There are many examples to illustrate this type of behavior and its consequences :

  • While you have set an entry zone on a cryptocurrency, its price does not stop to increase. After a 50% rise, you end up investing for fear of missing out on the opportunity of a lifetime. Unfortunately, this cryptocurrency is falling and you resell at a loss.
  • After a few bad trades, you invest all the rest of your savings in a project promoted by your favorite influencer without doing your own research. Unfortunately, it was a scam and you lose it all.
  • After hearing about incredible gains on the new trend, the Play-to-Earn, you decide to invest in the project of the moment. Unfortunately, the latter was greatly overvalued and you collect significant losses.

As you will have understood, cryptocurrency enthusiasts most often succumb to FOMO in response to a mass Effect. Beyond the fact that the mass… is most often the loser, it is this crowd psychology which causes irrational market movements, often the cause of speculative bubbles.

This can be explained quite simply: we observe the way other people act to find the appropriate behavior to adopt in a given situation. Some “influencers” have understood this well and use these notions to generate a feeling of FOMO with their communities.

We are therefore generally led to succumb to the FOMO during the final phase of a bullish movement, i.e. when:

  • The increase becomes irrational.
  • The excitement is at its height.
  • Forward-thinking investors take profit.
  • the risk / return on investment ratio is the worst.

Of course, it is possible to make profits after succumbing to the FOMO. However, failing to improve your trading habits is tantamount to betting on a potential short-term gain against certain long-term losses.

FOMO and market cycles

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Learning to overcome FOMO is usually done in the pain and after acquiring experience necessary. 10 principles of common sense can, on the other hand, allow you to slip through the cracks:

Adopt a plan

This is probably the principle that encompasses all the others: do not try to reach the finish without going through the start square. And when it comes to investing and trading, square one is your strategy.

Opt for a plan that suits you, that you know how to adjust and stick to. Don’t give in to your primal instinct, set yourself limits about allowable profits and losses and stick to them.

Cultivate your risk management

Build yourself a balanced portfolio, dedicate a small part of your portfolio to risky projects and limit the leverage effects.

do not forget to take profit and don’t be more greedy than your plan of action calls for.

Do your own research (DYOR)

inquire on the project before investing, understand the complexity of this market before it undertakes to make you understand it by force.

Don’t believe everything you read (even here): everyone who inspires you has already deceivedwill be wrong again and will perhaps deceive you.

Prefer the Dollar Cost Average (DCA)

the DCA is an investment strategy that involves investing a fixed amount in a cryptocurrency at regular intervals. Encourage this type of strategy to smooth your entry price and of reduce the impact of volatility on your overall investment.

be patient

Do not rushconduct your research on time and always give yourself time to think things over before acting.

Allow time for the market to allow you to achieve the objectives that you have set yourself. Your purchase order has not been triggered? Regardless, there will always be other opportunities that will tick all the boxes.

Take a step back

Take the necessary step back on your investments, the evolution of prices and the ups and downs of your portfolio. Lack of hindsight is one of the main reasons that will lead you to make hasty decisions such as giving in to FOMO.

Face your certainties

Deconstruct them mental models fed by social networks that distort your appreciation of reality. Despite appearances, not everyone wins from an investment in cryptocurrencies. Many lose, make mistakes, suffer setbacks and never talk about it.

Learn to accept

Learn to accept your failuresthe lack of time to dedicate to your research, the missed opportunities… You are not and will never be in all the right moves.

Don’t be isolated

Surround yourself with people who feel the same as you, compare your opinions and share your difficulties to overcome them together.

Be careful, however, to respect the other principles in order not to give in to a group effect which could be harmful.

Follow the trend intelligently

It may seem paradoxical, but if you have followed the previous advice, the phases of collective FOMO represent, for the informed investor, a period synonymous with opportunity. Learn how to enjoy it while maintaining your rigor.

You will therefore have understood that succumbing to FOMO will make you make the worst decisions. Fortunately, respecting a few principles should allow you to face the market with more serenity. In the meantime, you can also turn to stablecoins and their many strengths.

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