What is a FOMO Trader in Forex Trading?
Do you have fear of losing out? Are you a FOMO trader? Your peers are already earning big bucks while you are having a tough time with your trades. That’s too frustrating, right? According to research conducted by Stanford, one of the greatest fears of investors is to lose against their peers. This fear is sometimes more prevalent rather than the fear of the risks involved in Forex trading.
But trading and losses are tied together. Every trader ought to experience losses because the market itself is full of uncertainties. So, what’s the best thing to do? Prepare a battle plan. But first of all, let us discuss what makes a FOMO trader.
Two Things That Makes Up A FOMO Trader
No matter what it is, in trading or real life, our brains are programmed to want instant gratification. This is something that fulfills our pleasure. It is so good to win. This is also the reason why people choose fast foods rather than home-cooked foods which are a lot healthier. Waiting is not so good. You have that desire to get what you want instantly, without any delays.
It is just the same when entering a trade. You have got the feeling of rushing things for your own gratification. That’s the time you create mistakes. Patience is indeed very important in FX trading.
FOMO traders tend to have fear of losing an opportunity. So, they tend to grab the opportunity, not analyzing it first to avoid making the wrong move. But this is totally incorrect. Your trades have a better chance of success if you confirm it thoroughly. Don’t worry, there are still a lot of opportunities that will come along.
The Battle Plan
Don’t be Impulsive, Stick To Your Trading Plan
To avoid being FOMO, the first thing you need to do is to follow and stick to your trading plan. Don’t leave room for interpretation. Also, you must develop a habit of controlling yourself from making spontaneous trades. When you lack structure, you tend to become impulsive with your trades.
Wait Until the Confirmation Arrives
This confirmation can either come in the form of price action, retests, indicators, or support and resistance levels. Timing your entry right is more important than being afraid to miss out. Nonetheless, it is much better to enter a trade a bit later and be right about it than enter a trade early just to know that your decision is wrong.
Stop Orders and Limit Orders
Placing market orders when it is not necessary enforces an impulsive behavior. This is pretty common among new traders. What you have to do is to create a market analysis and know the price point when entering the market. Stop orders and limit orders are both very important in Forex trading.
Using Price Alerts
By the time you start using price alerts, you will realize that you can never do anything without it. Rather than continuously looking at the charts, you can place the price alerts right at the critical level.
Lastly, you must know the kind of Forex trader you are. Be disciplined and aware of your emotions deep inside.