The author admits to having had FOMO (fear of missing out) when they exited positions too early in the past, especially during the bull market. However, upon reflection, they believe they took profits at perfectly timed moments. The author advises readers to analyze the market carefully and develop a game plan, while also being comfortable with taking profits and not second-guessing themselves if the market continues to trend higher. They cite an example of a bear market rally of 300 in 2019 with Bitcoin.
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FOMO in Trading: Overcoming the Fear of Missing Out
Trading in the stock market can be both exciting and frightening. The fear of missing out or FOMO is a common concern among traders. This fear can lead to rash decisions like getting out of positions too early which can ultimately result in missed opportunities for profit.
The Bull Market and FOMO
During the bull market, FOMO was especially prevalent in traders. Market enthusiasts who didn’t want to miss out on any gains would often get out of their positions too early. As a result, they missed out on the potential profits that they could have earned if they had been more patient.
Taking Profits at the Perfect Time
If we look back on those moments from our current position, we can analyze whether taking profits at that time was the right call. The reality is, there is no perfect time to take profits. However, if we make a sound plan and follow it, we can find comfort in knowing that we made the right choices.
Learning from the Past
It’s not always easy to know when to take profits, and traders can often feel lost in trying to make the right decisions. However, looking back on past experiences, we can learn from our successes and our failures. Sometimes we will make the wrong call and that’s okay, as long as we take away the lessons and use them to improve our trading methods.
Coming Up with a Game Plan
To make sound decisions in trading, creating a game plan is essential. Map out your plan based on your research and analysis of the market. Stick to your plan, even when the market starts to move in unpredictable ways. Remember, the goal is not to make a perfect plan but to have a plan that will help guide you towards making good decisions that are in line with your goals.
The Comfort of Following Your Game Plan
When you take profits according to your game plan, you can feel comfortable because you know that you followed your plan. Even if the market moves higher after you take profits, you can be confident in the fact that you made a decision that aligned with your goals.
In conclusion, FOMO can paralyze us from making sound decisions in trading. However, if we learn from our past experiences, create a game plan, and stick to it, we can make decisions with more confidence and certainty, ultimately leading to more successful trading.
