FOMO and crypto

How to Resist FOMO when Buying Cryptocurrencies?

High risk appetite is already leading to elevated valuations for Bitcoin and other large altcoins and considering a lot of people are now seeing rapid gains, FOMO is one of the common reactions especially among inexperienced individuals. We know that seasonality is favoring crypto during the end of the year, but even with that important tailwind, emotional trading/investing can be damaging in the long run, which is why it must be suppressed, using several simple methods.

# Stick to your trading system

FOMO (Fear of Mission Out) is responsible for the regular market exuberance that occurs in the cryptocurrency market, leading to overextended market moves and sometimes, bubbles. One of the main reasons why it is so damaging comes from the fact that traders end up with a sub-optimal entry location and thus will need to manage trades in the negative, before banking some profits.

When the market enthusiasm is already elevated, the best way to get involved is by waiting for pullbacks. As a result, it does not matter what other overly-enthusiastic people are saying, but what your trading system suggests. Professional crypto trading requires a well-defined set of rules for conditions to open or exit a trade, risk management, analyzing the market context, or other tasks.

# Ignore biased news

There is always a dominant narrative among the major news outlets, dictated by the market’s performance. If prices go up, positive reasons are found and vice-versa when the markets are dropping. Although in some cases, that is justified, for people looking to buy or sell crypto at optimal valuations it is not a factor to take into account.

Sometimes, it is critical to have a contrarian mindset, a difficult task when everybody is headed in one direction. The solution is to ignore biased news and instead focus on those that analyze both sides of the coin. Bitcoin is now trading above $16,000 but it would be important to consider that from a technical standpoint, it is in overbought territory since mid-October.

# Follow experienced traders/investors

Thanks to the internet, a lot of intelligent people are able to speak out via various platforms, with no limitations. Not all have enough expertise to make suggestions on the crypto market, but some have a proven track record in analyzing the market objectively, with the sole purpose of informing their audience about what could happen next. Always look for balanced opinions provided by experienced traders/investors, even though some of them are not media stars.

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