The Signs of Fear of Missing Out (FOMO)

is a common trait among new and experienced traders.

Emotion isn't something we can eliminate completely. What we can do is to develop a mindset (through constant learning) and habits (through repetitive practice) that can enable us for peak performance.

"Chains of habits are too light to be felt until they are too heavy to be broken" - Warren Buffett

1. Emotionally triggered/attached

"Why is it going up? Why is it going down? Why is it doing this? Why is it not doing this?".

No one has any control over the market movement or its direction (unless you're doing insiders' trading). The market movement is created by millions of traders (randomness). In the short-term, it is mostly driven by technical, and in the long-term, it is mostly driven by fundamentals.

Do not try to impose our personal will or expectations in the market, because it simply doesn't care. Trade what we see. Conduct our due diligence. That's it. If we're always having that stubbornness thinking we must be right, it's just the matter of time where reality hits and we'll get hurt pretty badly.

2. Not following our initial plan

To be consistently profitable, we need to tackle the market everyday in the same perspective. We cannot allow ourselves to constantly switch from one strategy to another. Consistent action plan generates consistent result, put more attention into the process not the outcome.

"The eagerness to control the outcome is illusional" - Rande Howell

3. Constant re-assessment (Overthinking)

If you're a FOMO person, you'd tend to overthink a lot.

"What If I don't sell now, it goes down? What If I don't buy now, it goes up?"

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.

4. Jump from one bias to another

Have you ever switch from long bias to short bias so quickly just because you "think" you're wrong?

Because of some sudden market movement, you unconsciously throw your initial plan out of the window then make some impulsive decisions. If yes, then from now onwards you MUST remind yourself that there are only 3 general directions in the market (Up/ Down/ Sideway). Stick to your initial plan or bias, unless you're an experienced trader with great flexibility on spotting short-term momentum shift. Or else, simply allow the market reveal whether you're right or wrong. Avoid rotational market condition especially when you're new into trading, because it is usually where majority tend to give back their hard earned profits.

5. No 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. Never give up, and learn to make peace with your losses. As long as you stay in the business long enough, you will succeed.

Put in the effort to do back-testing. It gives you the confidence to execute the same setup repeatedly as you have the data to back-up your mental capital when you're having some terrible drawdown. Knowledge is power.

6. Nervous/ panic

This is one of the common texts I receive regularly.

"What should I do?

I am currently down xxx $ amount".

Discipline is the toughest yet the strongest tool in trading. If you're uncertain about your decision or the outcome, simply avoid them. Hesitation comes from fear, If you're uncertain about a position, don't take them. It makes no sense putting your money at risk on something that you don't even know. Quality over quantity, focus on high probability setups. How do you assess the quality of a setup? Simply back-test them, then find out the long-term expectancy of the strategy.

"The market is a device for transferring money from the impatient to the patient." - Warren Buffett