FOMO means fear of dropping out. Fumo is mostly used in the field of investment and it is interesting to know that it is not just for new investors. This feeling often affects professional investors as well. The decisions that follow Fomo are not based on research, but on the feeling that “not to benefit as much as others”, or in other words, “comparing myself to others”.
There are many destructive emotions in the financial markets and Fumo is one of the most destructive emotions. Of course, it should not be overlooked that fumo is a natural and common feeling among all human beings, especially investors; But in order to have a successful investment, we must control it in some way so that it does not take control of our minds and harm us. We often find that the area or market in which we have not invested is growing rapidly and becoming profitable. This is when the feeling of fumo comes to us and we think that we are all ahead of ourselves and have lost a lot of profit, which is natural; But we need to overcome this fear as much as we can.
Below we will discuss the effects of this feeling of fear and ways to get rid of fumo. In this article, we will look at how emotional investments are structured, how they capitalize on our capital, how they affect our profits and losses, and how we can avoid falling into the red lines of our trading strategy. Stay with us.
Emotional investing can make investors act on their inner feelings and impulses instead of analyzing, and this has a strong negative impact on their trading strategy and profitability.
Overcoming emotions is one of the most difficult obstacles for investors to overcome. And one of the most important reasons for investors to lose money in digital currency trading is this fumo.
Unfortunately, our emotions are a natural reaction to market ups and downs. Fear and anxiety overwhelm us when the market falls. Or when the price of an asset reaches its highest levels, fumo or fear of loss intensifies in us.
All successful investors know that following these impulses and emotions will either lead to early sales and deprivation of additional profits, or will lead to late purchases and falling prices and loss of capital.
Although these sentiments are very common in traditional markets, they are much more common in the world of digital currencies. This is due to sharp and not very predictable price fluctuations, which lead to significant gains and losses.
Read more: 6 ways to control emotions when buying and selling digital currencies
Emotional investing occurs when the financial benefits and emotional feelings of an investor or trader become very close.
To be more precise, one of the most well-known reasons for the success of trade or emotional investing is that one does not look at investing only as an investment or looks at invested money not just as money, but as investing in one’s emotions. .
For example, it is very dangerous for an investor to see his investment as something like a new car, a luxury vacation or getting rid of past debts.
If investors can view their investments and assets in the form of a third party and as a stranger, they may be able to get rid of the emotional mentality.
What does it mean in the third person? This means that one can consider the loss of a transaction as a normal event that can always happen without being considered a beneficiary. In such a situation, the person is very well aware that this loss is as much as he expected at the beginning of the investment, no less, no more.
If the investor has this view, he does not see profit as a kind of personal superiority over other people, but sees it as something that happened because of putting money in the right place at the right time.
Of course, since this thought process is a bit far from human nature, it is necessary for the investor to start with less money and at least form the right way of thinking to overcome emotions.
Automated or automated solutions can help traders formulate their trading strategy so that they are not forced to trade and invest based on their emotions.
In addition to the mentality, various tools can help overcome emotional investment. One of the most common of these tools are trading platforms that have predefined buy and sell settings. These features allow the trader to maintain a trading strategy and allow another strategy or platform to think and act for him.
Tools such as robots make the trader’s experience a more passive experience, where the trader does not have to look at and read charts and graphs, which takes time.
However, although robots have been shown to be able to offset some of the effects of trade and emotional investment, they do not guarantee profits or create a risk-free environment. So it is better for traders to work with simulators before investing in robots and experimenting with unrealistic numbers so as not to suffer losses.
In this article we tried to discuss fumo and its effects, as well as ways to get rid of fumo. We said that fumo means fear of loss and falling behind. This feeling of fear comes to us when we see the benefits of others in markets and assets that we do not have; It is a kind of self-comparison that overcomes negative emotions and makes irrational decisions about trading and investing. Emotional investing can make us act outside the rules of our investment strategy and cross the red line. In these circumstances, one can expect nothing but loss.
We have tried to introduce you to two practical and useful ways to overcome fumo and emotional investing: first, to look at your investments as a third party and second, to use tools and platforms that have pre-set settings and efforts. Reduce chart validation and spend time retrieving data.
Of course, we mentioned throughout the article and reiterate that these automated tools and platforms reduce the risk of investing and trading to some extent, but do not guarantee profit or zero loss. Therefore, it is advisable to use trial versions before using them to fully master the skills to use them.
Finally, our common advice to you is to create constructive thinking for yourself; An attitude that is far from emotional and has a lot of respect for your predetermined strategy. In this way you can make deals and investments rationally and away from the feeling of fear.
The publication How to get rid of fumo and stick to our strategy? appeared first for currency.