Turning FOMO (Fear of Missing Out) into a good thing
Are you beating yourself up because you missed out on the post-Trump rally?
If so, you are experiencing FOMO, otherwise known as the "fear of missing out". FOMO is a common psychological phenomena that human beings experience in many walks of life, but is especially prevalent in the trading game. This fear leads to one of the most costly trading mistakes that even well seasoned traders make.
Trading FOMO takes over because it is especially tough to escape our natural psychological tendencies. Mr. Market knows this and preys upon our weakness.
Recently I experienced a bit of FOMO by missing the big post election move in Steel. What made this difficult was early on I identified it as a key sector right after the election, but was not able to trade it because it flew off the gate without giving a solid low risk setup to trade. At this point, as emotions take over, the temptation is to just jump into the trade. However, that's usually the worst thing you can do.
Shift Your Perspective
Instead, when you experience FOMO as a big run is in play, shift your perspective by thinking about the future instead of the past. Rather than focusing on wha you missed, ask yourself "what's the next setup".
Let's take a look at my current steel trade. Sure I missed the first move, but I know there's always a "next move" that will present itself.
Instead of jumping in at what could be the worst time to enter (when all of the "dumb money" enters after experiencing FOMO), I entered short on Thursday off the newly developing parabolic short setup (watch this past RUN trade for more on this setup). This setup offers a solid quality setup which also provides a low risk, high reward profit loss ratio.
For more on FOMO and the extended steel sector, watch this Periscope I recorded on my jog at Torrey State Beach in San Diego.
— Paul J. Singh (@PaulJSingh) December 10, 2016
The next time you experience trading FOMO remember to flip it around and ask yourself "what is the next setup". This turns FOMO from a negative into a positive. Winning traders turn FOMO into a good thing.
How the Swing Trade Report Helps:
I've designed my swing trade report to help those who are new to part-time trading avoid the hurdles that held me back for years. First is the education. As I mentioned above, it's easy to collect "trading trivia" that feels valuable on the surface but is functionally useless. The strategies that I use and teach have zero fluff. If something isn't useful in the real world of trading, I don't include it. As someone engaged in part-time trading, you must focus your limited hours and mental bandwidth on what is most useful, and my report will help you do that.
One of the biggest mistakes I made as a new trader - and it's one that almost all new traders make - was not managing my risk properly. It's important to understand that the way a day trader and a swing trader manage risk aren't identical. When you are part-time trading, you can't sit and watch every tick of a stock. Some stocks that would be fine to day trade are simply too volatile to swing trade safely. I curate my watchlist with this in mind, leaving out the craziest momentum stocks, while keeping huge movers like $FCX (19% gain, 3-day hold), $UCO (27%, 2-week hold), and $NUGT (24% 2-week hold). When I alert a stock from my report, you run little risk of missing the entry and chasing, and you won't have to be worrying that it will make a drastic move overnight.
The swing report will help you gain confidence as a trader. Rather than trying to piece together something that works from a random collection of books, forum posts and blogs, you'll get one concise, cohesive report that gives you everything you need. No more jumping around from one system to the next. No more blindly following the latest social media buzz. You'll earn your confidence as a part-time trader one successful swing trade at a time.