FOMO stands for “Fear Of Missing Out.” This concept was first described in 2000 by Dr. Dan Herman in an academic paper entitled “The Journal of Brand Management.” However, the acronym FOMO was coined several years later by Patrick McGinnis in an opinion piece published in 2004 in the American magazine “The Harbus.”
This concept refers to feelings of anxiety or the idea that others are sharing positive or unique experiences when we miss them. This is a fairly common phenomenon on social media, with feeds from other people often highlighting and emphasizing the positive and useful parts of their lives, leaving readers feeling sad or inadequate with their own experiences.
In the context of financial markets and trading, FOMO refers to the fear that traders or investors feel about missing out on a potentially profitable investment or trading opportunity. The feeling of FOMO is especially prevalent when an asset rises in value significantly in a relatively short period of time. This has the potential for an individual (and the market community as a whole) to make market decisions based on emotion (fear of missing out) instead of logic and reasoning. This is particularly dangerous for undisciplined retail investors, as it can often lead to situations where trades are made for overpriced assets, posing a much greater risk of financial loss.
Here are 3 tips to avoid FOMO in investing:
1. Manage risk
Managing risk is an important step in preventing FOMO in investing. Mature risk management can be a safeguard so that the losses we experience are not too severe.
2. Create a trading journal
Everyone’s journal will indeed be different, depending on their respective investment goals. Journals or records for buying and selling crypto assets can help you monitor each activity and evaluate it. That way, we become more aware of what the consequences might be.
3. Be wise in using social media
Social media can help investors. However, when we feel left behind from others, we also have to be careful. Don’t just rely on information from social media as a reference for investing. You can learn more about crypto assets at Indodax Academy!