If you’ve been trading Forex for a while now, you’ve probably experienced one of the destructive enemies of a trader — FOMO.
Almost all, if not all, traders and investors experience this type of emotion at one point or another. Because you have to admit, the idea that you missed out on a trade that would have earned you a lot doesn’t feel good at all.
Unfortunately, allowing your fear to control your next trading decision has the potential to decimate your account. This is why you need to understand FOMO and learn to deal with it the right way.
But why not work to develop the characteristics opposite of FOMO?
Instead of the fear of missing out, you substitute the emotion with JOMO or the joy of missing for better risk management.
What is JOMO?
JOMO is the antidote to FOMO. It suggests that you accept that it’s okay to miss out. Rather than become fearful that you’ll miss out on a great trade, even when it’s outside of your plan, you stay calm and disciplined.
This can be achieved by developing the psychology that allows you to experience the joys of missing out.
How does a JOMO trader think?
Here’s the difference between how a FOMO trader and a JOMO trader think:
Scenario #1: GBP/USD shows a possible trading opportunity.
FOMO trader: Everyone is trading GBP/USD, so why shouldn’t I do the same?
JOMO trader: Based on my analysis, GBP/USD seems volatile and, according to my trading plan, it seems too later to enter a trade. It’s best to wait for this one out.
Scenario #2: For the first time in six years, the price of gold reached its peak.
FOMO trader: I’ll jump on the trend and enter a trade.
JOMO trader: Based on my research and analysis, the winning opportunity has passed and the market is likely to reverse soon. I’ll wait for this next opportunity.
Scenario #3: The charts indicate a good trade could appear within the day.
FOMO trader: I’ll watch the charts all day so I don’t miss out on that exact moment when that opportunity happens.
JOMO trader: My system automatically analyses the charts so I don’t miss out on any trading opportunity. If I decide not to trade, it will be because I choose not to.
Based on how each type of trader reacts to certain scenarios, it’s easy to see that a JOMO trader have distinct characteristics that set them apart from a FOMO trader.
- Discipline to stick to your trading plan.
- Patience to wait out until the best trading opportunity presents itself. You don’t jump on a trade based on probabilities and social bias.
- Calmness to stay in control of your emotions.
- Objectivity to look at a trade based on facts and data.
- Independence to decide which trade to take rather than be influenced by external factors or triggers.
- Confidence in your skills and trading plan to help you make the right trading decision.
How do you become a JOMO trader?
- Develop a tried-and-tested trading plan.
- Keep a trading journal and use it diligently to analyse, reflect and make yourself accountable.
- Refer to expert and authoritative resources to perform fundamental and technical analyses.
- Filter information when listening to other traders or engaging in social trading.
- Work to improve your trading psychology to gain mastery over your emotions and develop good trading habits.
Most importantly, work hard to develop a healthy relationship with trading. Your trading activities and decisions should not impact your health negatively but give you satisfaction.
Time to kick out FOMO and replace it with JOMO right now!