In a 2004 op-ed in The Harbus, author Patrick McGinnis coined the term FOMO.
Originally identified as a form of social anxiety in 1996 by marketing strategist Dr. Dan Herman, it stems from the belief that one is not in-the-know or out of touch with some sort of experience, interaction, or social event.
The dichotomy about the ‘fear of missing out’, also known as FOMO, is that it seems every trader knows about it, but many fall victim to it, oftentimes being fully aware of when they are.
Sometimes we shrug it off, have a chuckle about how we ‘can’t help ourselves’ and just accept it as a reality of trading.
But I don’t want to miss a great opportunity.
We’ve all heard it before. The A+ once-in-a-year opportunity, right?
But, is it true?
We live in a modern age.
Social media gives us huge access to the lives of others, and no shortage of access to the perceived successes of other traders.
Note: I’m not very active on Twitter, but I do not follow traders or ‘gurus’ who post their performance, because it’s usually completely out of perspective with my own trading reality.
Why in the profession of trading are we constantly intrigued by the performance of others?
And chalk it up to it being inspiring or motivating.
For some, it just might be. And there is nothing wrong with that on the surface.
But what happens if you don’t achieve that perceived level of awesomeness?
When you are faced with decisions every trading day and suddenly the idea of “winning,” “being right,” “hitting a home run,” creep in.
It’s your time to shine, right?
So you let the fear of missing out smack you in the face, and you embrace it…
- You take more size than you should.
- You add to your losing position because you “gotta be right.”
- You sacrifice gains from the last day, week, month.
Eventually, you throw in the towel…only to watch the trade play out as you had hoped.
It could go down a dozen other ways, I just laid out one straightforward situation that happens to at least some traders every day.
Are you really missing out though?
Here is the truth…
As traders, we are always missing out on trades. There are too many names, too much happening that is outside our control.
The question to ask yourself, what do you get out of being worried that you are missing an opportunity?
The answer more often than not is…disappointment.
FOMO is just an excuse.
It’s what we place our blame for lack of discipline and confidence when we make the mistake of believing we didn’t do what we could or should have done.
Let that sink in for a moment.
You should have a reason for every decision you make in trading.
You place a trade…intentional.
You don’t place a trade…intentional.
Your reasons should come directly from your edge, your plan, and your discipline framework.
No one else should be influencing your decisions, your reasons for getting into or out of a trade.
No one should be controlling any sort of emotion.
It doesn’t matter if you have a coach or mentor, you’re talking with another trader in a chat room, or following them on Twitter.
You’re the one with access to your account.
You’re the one clicking buy, sell, short, or cover.
You make your own decisions.
You have to decide that you never miss out on anything because you are always doing everything with intent.
FOMO has no place in your mind, in your trading, or your reflection on your performance.
Easier said than done, right?
In the past, I too was guilty of giving in. Even when I’d end my day, I would often keep checking my phone for where stocks were headed.
I’d get back on and lose money after being up on the day as a result of not wanting to ‘miss out.’
Sometimes it was a good opportunity, but every time I realized it was not worth it.
I had to slowly integrate the mindset of “couldn’t care less.”
Done is done.
As far as trading goes, I might as well be on an island. Alone with my reasons, (regardless of whether other traders out there agree) and the decisions I make.
Not decisions based on greed, hope, or fear.
Decisions that are based on the right mindset and discipline. That being wrong is a strong possibility.
But by focusing on where I can anticipate the greatest probability of being right, and taking that trade…well there is no need to be fearful.
I stopped caring about the big P&Ls of traders who trade more size than me. Who have been trading longer than I have a bigger account than me, or who have a legion of followers that can help ‘push the stock higher or lower.’
I just focus on what I can do. What my edge is. What I am comfortable with.
That’s the place you need to be at…or strive to get to.
Where no one else’s decisions can tempt you.
No move in the market can make you feel like you missed something.
The market always moves. It will keep moving with or without you.
FOMO is just an excuse to justify poor decision making, a lack of action, or a way to rationalize poor judgment. It most certainly reveals a giant weakness in your psyche.
Just because we are all human, have emotions, and are impacted by similar actions and results, doesn’t mean you have to be the type of trader that accepts you’ll be impacted.
Don’t let fear become any part of your trading.
Nothing good can come from it.