Solutions to deal with FOMO!
There have been countless videos, blogs and even course sections setup to deal with the subject of FOMO in trading, yet it is still one of the biggest reasons traders lose, because it makes then break their system entry rules! - believe me, you do it and I do it, but everyone needs to STOP!
To being this post I'd like to start with some of the main signs of FOMO:
Emotionally triggered by market movement
Breaking your trading plan and/or your trading system
Putting financial pressure on yourself which creates the urge to be in a trade (over trading)
Jumping from one direction to another
Not having a complete strategy & game plan
No emotional management
The one thing we all need to remind ourselves, when it comes to FOMO, is that, emotion isn't something which you can eliminate completely, because we, human beings, were made with emotions, what you can do is to organize your mind to control its performance, and there are many ways to do this and we will be listing some of them in this blog post.
What I would like to do now is break down some of the above points and add more detail to them.
1. Emotionally triggered by market movement
The market will move in which ever way it wants to move and unfortunately that will many times result in getting hit with a stop loss even tough the trade idea might have been absolutely perfect, it happened to me just today... this is where FOMO needs to remain under control and we need to think with clarity.
If we allow the market to control our thinking we are then just being reactive, if the market gives us good, take profits and great entries, we are happy if the market gives us bad, SL hits, miss an entry, we are sad... to be a real trader you must not be reactive but proactive, always controlling your mindset, emotions and focusing on the task at hand, which is to be the best trader you can be.
Don't let the market affect your psychology, rather control it at all times, your mind is yours and your alone, you decide what it does!
2. Not following your initial plan
I will make this point short and sweet. To be consistently profitable, you need to tackle the market everyday in the same perspective. You cannot allow yourself to constantly switch from one strategy to another. Like we wrote in yesterdays blog post, you need to only trade one system and one system alone!
3. Putting financial pressure on yourself which creates the urge to be in a trade (over trading)
If you're overtrading right now that is a major sign of FOMO and that means you absolutely shouldn't be trading, because you have so much more work on your mental battlefront, in basic language you're not a trader and all you will do is LOSE MONEY, you don't want that do you? Then stop trading and plan out a way on how to control your emotions and remove overtrading from your life!
You simply do not need to get involved in the market all the time to make money, profit comes when you're doing the right thing over a long period of time, and not doing it all day long.
4. Jumping from one direction to another
Question, have you ever switch from long bias to short bias so quickly just because you "think" you're wrong only to be proven (by SL) that your wrong again?
This usually happens because of some sudden market movement, you unconsciously throw your initial plan out of the window then make some impulsive decisions (by being reactive as we just said in the previous point).
If the answer is a yes, then from now onwards you MUST remind yourself that there are only 3 general directions in the market (Up/ Down/ Sideway).
There are many ways to deal with this and one of them is plain old focus (on your system and price action) supported by patience... and by patience I mean waiting for the next VALID trade confirmation!
5. Not having a complete strategy & game plan
Trading is not a get-rich-quick game. Work hard, study, and practice to improve your knowledge. It is a marathon not a sprint , to succeed in this business you will experience failure, but you cannot give up too quickly, focus on learning to make peace with your losses.
As long as you stay in the business long enough, you will succeed, given the fact that you are not trading with "insanity" which Albert Einstein describes like this: "Doing the same thing over and over again and expecting a different result".
Knowledge is power. Experience is power. And they both lead to improved skills!
6. No emotional management
Disciplined emotions are the strongest tool in trading. The one way I remain emotionally disciplined is by trading for brief periods of time and trading with complete focus during those times.
I guess this is the end for the day... but before we let you go here are some back test results from a new algo we are building which will be available for investments via cTrader copy next week! - Ask us via chat for more details or subscribe at the top of this page and we'll mail you when its ready!
DAX March 2022 / 9% Drawdown / +195% profit
NASDAQ April 2022 / 4% Drawdown / +59% Profit