Happy Tuesday, friends! I wanted to share some thoughts with everyone about why panic buying isn't any better than panic selling in terms making consistent returns.
The fear of missing out, or FOMO, is a very real phenomenon. I'm sure just about everyone reading this has experienced that pang:
The fear of losing out on gains.
The opportunity passing us by.
Not fitting in with others taking the same trade.
But how often does "FOMOing" into a trade actually work out?
Isn't it fair to say that by the time we're experiencing FOMO the excitement may already be so pervasive among other market participants that we could be setting ourselves up for a wild ride? One that may lead to loss rather than gain?
If anything, acting on fear (or greed) alone creates a mess of emotional responses that often lead us down the path of self-destruction, especially when those feelings are intense.
To avoid FOMO I do the following:
Reduce my exposure to content that might inspire it (such as social or financial media posts promoting particular stocks or other trading vehicles)
Do my own research to validate a trade thesis rather than rely on third parties
Only execute trades when I have a thesis which includes quantifying that reward is higher than risk, my ideal entry, exit points (to capture the reward or realize the risk threshold was exceeded)
Record my trades in a trading journal, to include when, why, how, and what the strategy behind the change in positioning was at the time
Stay mindful of key truths, such as the evergreen notion that there is always another opportunity, and forcing a trade over a fear of missing out rarely leads anywhere desirable
Meditate: almost every day I spend at least 10 minutes meditating as I wake up and before I go to bed, which helps me to center my thoughts and emotions
Remember that at the end of the day we are responsible for every trade that we make or do not make, and that sometimes the trades we don't take are our best because of the losses we avoided.
Be nimble out there, my friends. This is a wild market.