Reverse FOMO Kills Traders Too
You know what FOMO is. "Fear of missing out". In this context, it refers to investors piling their money into an asset or opportunity that's already reaped incredible returns (or is projected to yield such) with much less forethought than usual out of fear that "waiting" or taking the time to properly research & strategize.
Some call it "apeing".
This is a concept we should all be very familiar with - so I won't waste any time speaking on it. Instead I want to touch on a concept I like to call, "Reverse FOMO"
Example of Reverse FOMO
Let's go back to that Bitcoin price analysis I published on January 13th. Suppose I had no R/R or strategy for how I was going to manage my position.
I enter into a long on Bitcoin that very day and - lucky me - $BTC's price moves steadily north from that point in a near-linear fashion for the remainder of the month (until Jan 29th).
On Jan 29th, that position was up +19%. Pretty damn good. However, from Jan 30th-Feb 11th, the price drew down 10%.
Without a plan, another trader might have been inclined to sell their position during that Jan 30th-Feb 11th period. Their logic might have been, "Hey, I was already lucky enough to make X% on my trade. Now the price is going back down. So I better exit this position ASAP so I can salvage my profits while I still have some."
I refer to this process and rationale for exiting the position as reverse FOMO. Why? Well, what's the opposite of missing out? If you ask me, I'd say its losing out. Thus, Reverse FOMO = Fear of Losing Out.
In this case, we've already profited a decent % on our position. However, once we sent the markets may be moving in a direction contrary to our interests, we may be inclined to exit prematurely out of fear that the profits we've obtained thus far will be wiped if we take too long to actualize.
You know what FOMO is. "Fear of missing out". In this context, it refers to investors piling their money into an asset or opportunity that's already reaped incredible returns (or is projected to yield such) with much less forethought than usual out of fear that "waiting" or taking the time to properly research & strategize.
Some call it "apeing".
This is a concept we should all be very familiar with - so I won't waste any time speaking on it. Instead I want to touch on a concept I like to call, "Reverse FOMO"
Example of Reverse FOMO
Let's go back to that Bitcoin price analysis I published on January 13th. Suppose I had no R/R or strategy for how I was going to manage my position.
I enter into a long on Bitcoin that very day and - lucky me - $BTC's price moves steadily north from that point in a near-linear fashion for the remainder of the month (until Jan 29th).
On Jan 29th, that position was up +19%. Pretty damn good. However, from Jan 30th-Feb 11th, the price drew down 10%.
Without a plan, another trader might have been inclined to sell their position during that Jan 30th-Feb 11th period. Their logic might have been, "Hey, I was already lucky enough to make X% on my trade. Now the price is going back down. So I better exit this position ASAP so I can salvage my profits while I still have some."
I refer to this process and rationale for exiting the position as reverse FOMO. Why? Well, what's the opposite of missing out? If you ask me, I'd say its losing out. Thus, Reverse FOMO = Fear of Losing Out.
In this case, we've already profited a decent % on our position. However, once we sent the markets may be moving in a direction contrary to our interests, we may be inclined to exit prematurely out of fear that the profits we've obtained thus far will be wiped if we take too long to actualize.