Imagine waking up in the morning and your best friend asking you if you were trading Cardano (ADA), that it pumped up to 100% last night.
You would be terrified, right? You can even buy Cardano immediately to see if you can make some profit like your friend. The action you just exhibited is FOMO (fear of missing out).
Don't be worried; it is common among crypto traders, but you need to control it, right? Not dealing with the fear of missing out can lead you to make terrible trading decisions you will regret later.
Continue reading to see exactly the meaning of FOMO cryptocurrency, how it affects you, and how to deal with it.
What is FOMO Cryptocurrency?
Before you learn how to deal with FOMO crypto, you need to know exactly what it is and how it can affect a crypto investor/trader.
FOMO (fear of missing out) in the crypto space is a situation whereby a person makes decisions based on their feeling and information that is not properly verified.
Before trading cryptocurrencies, the normal process to go about it is to do market research and carry out your analysis before trading. But when FOMO sets in, you forget about all the analysis needed and go on to trade irrationally.
Any action after FOMO rarely ends with profits; it always ends with the trader losing out. Let's explain properly.
When you miss out on trading a cryptocurrency early, the price might be within the highest range before it rallies down.
So naturally, it would have been better to wait for the cryptocurrency's price to come down before trading. But because of FOMO, you are forced to make irrational decisions that make you trade at a high price and start losing money when it rallies down.
Causes of FOMO in Cryptocurrency
No one experiences fear of missing out without a major factor being in place. Here are the major factors associated with FOMO among crypto traders.
Unverified information is the major cause of fear of missing out; traditionally, the first step to crypto trading is research.
But when you get access to so much unverified information, it can lead you to make trading decisions that will end in losses.
So many crypto traders make 99% of their trading decisions from the information they get on social media, such calls maybe risky and not certain enough to base investment on.
Joining the Next Big Move
No one wants to be left out, right? Generally, no one wants to be the last to join a particular trend in fashion and other areas of life.
The same happens in the crypto market; no one wants to disappear from the next cryptocurrency that will blow up. Instead of making a profit, many crypto traders have lost their money trying to trade the next big crypto close to Bitcoin.
Trying to get success in a place where you have no experience is a bad idea, and it applies to crypto trading.
When you are a beginner, trade like one and scale up at the right time; stop trying to trade like a professional when you have the skills of a beginner. Amateur crypto traders venturing into markets they have yet to gain experience may incur heavy losses of capital.
How To Deal with FOMO Crypto
When you get information or call about a particular cryptocurrency, the first thing to do is research it before you trade.
Since most of the news during the FOMO period is mostly based on personal opinions, you may need to do research and analysis before trading any crypto.
Have a Trading Strategy
Before you dream of being a crypto trader, one thing you should have in place at all times is a trading strategy.
With a trading strategy, you can control your emotions even when there's tension and pressure to invest in an unknown crypto. A crypto strategy will also specify the amount of money you can invest in any cryptocurrency.
Remember that Scammers manipulate FOMO.
Sometimes scammers use people's emotions to get the better part of them using cryptocurrencies.
Scammers can manipulate the market so that you will be pressured to invest in a cryptocurrency, thinking its price will continue to rise. The result is usually the cryptocurrency dipping beyond your entry point, and you come out with losses.
Therefore, be critical of any call or promises with cryptocurrency trading.
Remember, the Market Is Highly Volatile
You should know, of course, that the crypto market is very volatile; therefore, it should always be in your mind whenever you are trading any crypto.
If you receive a call to trade a particular crypto pumping in the crypto market, take your time to conduct an analysis. An analysis will help you know if the crypto will soon go down in price or if it will continue to pump pending when you leave the market.
Crypto FOMO happens to crypto traders from time to time since everyone always wants to make a profit in the market.
To deal with crypto FOMO, one needs to conduct extensive research before trading any cryptocurrency. You also don't have to depend on social media as your sole source for investment advices.
Applying all the tips mentioned above will be a great step for you to stop trading any crypto based on unverified news.