Fear Of Missing Out (FOMO); In financial markets, when the price of an instrument starts to rise, amateur people who are not in a position at that moment think that the prices will rise even more and they become psychologically uneasy because they are not in the position. These people, who do not have sufficient financial knowledge and trader license, in order to relax psychologically; they open a trade position even though the price of the relevant instrument is overpriced and at the top.
Although the price of the financial instrument is at the top, these amateurs who are ignorant of this and fall into FOMO often lose as a result of these trade positions they open. Because the momentum of a financial asset with a higher price has decreased and the price of the instrument falls rapidly from the top to a certain level with the incoming profit sales. Amateur traders who are fallen into FOMO psychology and open positions when the price is at the top do not have plans B and C in the trade positions where their expectations are not fulfilled, and they lose as a result.
Professional traders can also get caught up in this negative trade psychology, which we call FOMO, from time to time. But because they are educated and have additional strategy and tactical knowledge, professional traders do not suffer as much as amateur traders do.
To avoid FOMO, you must have your own trading rules and abide by them under all circumstances. For example, traders who make the following statement a rule will never get fall into the FOMO psychology. "I buy an instrument when it's cheap, I sell it when it's expensive!"
In financial markets, there are 4 different concepts of cheapness-expensiveness. These; "Cheap Cheap", "Cheap Expensive", "Expensive Cheap", "Expensive Expensive" . Professional investors and traders always buy the instrument "Cheap is Cheap" and sell the instrument "Expensive".
Here are the people who fall into the FOMO psychology; Since they buy instruments that are either "Expensive Cheap" or "Expensive Expensive" with excessively high prices, they are likely to lose money on these instruments, whose prices will decrease with the realization of profits that will come in a short time.
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