How To Manage Your FOMO In Stocks Trading

 

In stocks trading and even in life the fear of missing out can cause us to make a lot of compulsive decisions. This can be very detrimental to keeping our confidence as we spoke on earlier and succeeding in trading! Today my  assistant coach in my stocks and crypto trading school John Balauat shares his thoughts on FOMO and how to manage it in our trades, so we can continue to make smart profitable trades on a regular basis.

 

What Is FOMO and How Do You Manage It?

 

One of the recent questions that we got recently is what is FOMO? If you’re trading the stock market, it’s really important that you know what it is.

Why? Well, when you recognize it, then you can manage it and make much better trading decisions.

 

What Is FOMO?

 

FOMO is an acronym for Fear Of Missing Out. It’s basically the anxious feeling all traders experience when an exciting trading opportunity happens without them in it.

FOMO is caused by fear, greed, jealousy, and impatience. If you let those emotions run without handling them, you can end up chasing after stocks and getting into some really bad trades … possibly even blowing up your account. Yikes!

 

How Do You Handle FOMO?

 

How do you prevent FOMO from messing up your trades? Well, the simple answer is the “D” word: discipline.

But to give you more practical advice, here are a few tips that will help you find consistency.

 

Recognize What Works

 

When you’re starting out with trading, it’s a good idea to keep a trading journal to write down your thoughts and experiences. The purpose of this practice is to find out what works (and what doesn’t) so that you can repeat what brings you success and stop what doesn’t.

 

Make a Trading Plan

 

You should always have a trading plan. This plan should include a trade entry price, a target reward price for an exit, and a stop loss that will prevent you from losing more money than you’re willing to.

Having a trading plan will decrease the amount of thinking that you need to do while in a trade. In this market, things can be really volatile and if you don’t have a plan, then you’ll probably make rash judgments that will be based on the anxiety you experience.

 

Take Profits Along the Way

 

If your trade is going well, take profits along the way. You’ll find that when you know you’ve made some money already, the anxiety you experience will be less.

 

Have a Comfortable Risk To Reward Ratio

 

Only enter trades where the potential for reward exceeds the potential for loss. If you believe that the stock has a good chance to significantly exceed the amount of your stop loss, then that’s potentially a good trade.

It’ll take time and experience to get good at recognizing a good risk to reward ratio but it’s something you’ll get better at if you’re intentional about it.

 

Conclusion

 

FOMO is part of the trading game and you’ll never really get rid of it.

Once you recognize that, then you can create rules that will help you manage your emotions so that you don’t let yourself get controlled by them.

 

– John Balauat

 

Do you want to become a better trader? Come join our Stocks, Trading & Crypto group. We meet every morning at the trading bell so that everyone can learn faster and more effectively. We’d love to have you join us!