My View of FOMO
I am a rules-based trader. If I was not a rules-based trader I would have probably blown my capital out years ago. I could become an emotionally driven, crazy trader if I did not have rules. My emotions would be my downfall. One thing is for sure – I need to avoid an obsession of trying to catch a move in a given market.
Perhaps you have had trades characterized by the following:
- You feel compelled to be in the trade. You do not want to miss a potentially large profit. In short, it drives you crazy not to have a position on.
- But, once you enter the trade, you become very uncomfortable and anxious, looking for reasons (technically or fundamentally) not to be in the trade. In short, it drives you crazy to be in the trade.
I trade chart breakouts. As a result I tend to buy into strength or sell into weakness. I make a distinction between buying legitimate bullish chart breakouts and buying as a FOMO reaction. A couple of examples might clarify this distinction.
The advance above .4000 by XRP on Sep 20 completed a double bottom pattern. I have not traded XRP, but a pre-entered buy stop at.4010 or so would have been a logical entry point. However, chasing the market later on Sep 20 – or worse, on Sep 21 – would qualify in my view as irrational FOMO.
Having a buy stop at 6960 or so in BTC on Jul 17 (or even buying the Wyckoff SOS day on Jul 16) was a legitimate strategy. In fact, I bought BTC on both days. But, entering BTC later on Jul 17 or subsequent days qualifies in my view as irrational FOMO. To avoid FOMO behavior traders must prepare and anticipate instead of simply reacting
I have traded chart patterns for more than four decades. Many of the chart pattern descriptions I see on social media make a mockery of classical charting patterns. It is vitally important for those interested in classical charting to read Schabacker and Edwards/Magee. Without this foundation it is quite easy to fall victim to FOMO disease.
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