Fomo (fear of missing out) is one of the most common problems for every trader, regardless of trading style or experience. But what if someone told you that everything that you think you know about fomo is completely wrong? Today, Alex sits down in New York City with Jared Tendler, a professional mental coach, who has trained countless successful traders. Keep on reading to change your perspective and learn how to combat those unwanted fomo feelings!
According to Jared, fomo is a deep down fear that comes from the sincere belief that this present opportunity (“right now”) is the last opportunity. This is different from the fear of “losing”, or “making a mistake” – missing out feels like you lost in comparison to other traders, friends, or chat members. If a trader feels that they missed a good opportunity, all of a sudden other traits show up such as revenge trading or chasing other tickers in order to make up for the lost opportunity.
Around 70% of people are overconfident. Therefore, traders often feel that they are skilled enough to capture a move even though they might not be experienced enough yet, or they might have missed their entry point already. Greed also plays an important role – being blinded by a position moving rapidly because a trader is only focused on making money. Lastly, it might trigger a loss of confidence: “Why did I not capture the move? Am I simply not good enough?” In short, fomo is an umbrella term.
But how do I know how fomo affects my trading? Jared suggests keeping notes as you trade to detect fomo in the moment. What thoughts are coming to your mind? What emotions are you feeling? Is it fear or impulses? By tracking your emotions, you can learn to separate yourself from the impulses and create new patterns. The key is to understand the thought patterns, categorize them, and change them effectively. Write down very specific thoughts that go through your mind, or indicators that you possibly manipulate to give yourself an excuse to trade. The goal is to find the underlying thoughts that drive you to make irrational decisions. How is my competitiveness, for example, standing in my way?
The thought that missing out on a trade is a mistake often encourages traders to make bad trades. Expecting to catch every winner is not realistic, and can lead to a cycle of unrealistic expectations, perfectionism, or simply thinking that a missed opportunity is a mistake – even though the trade didn’t fit your strategy from the beginning. Jared advised to be very clear about what a mistake is. A mistake is to disregard the criteria that you usually place on a trade – but not missing a trade that is not in your wheelhouse. A mistake is taking a trade that doesn’t follow your strategy.
Being aware of the actions and emotions is critical to get a hold on fomo. What are the situations when fomo is occurring? Spend some time contemplating the situation – when it happens, and how you usually react. Self-awareness is key!
Jared also suggests taking some time after a trade goes wrong (e.g. trades that didn’t get filled, your stop loss was triggered and afterwards the trade turns into a winner) and listening to your feelings and emotions. Just like a coach would do! If you can see the escalation, you can see the pattern. Establish your emotional control and get back into the driver seat. Take a 10-minute break to de-escalate the situation. Don’t make trading fuzzy but stick to your strategy and treat trading like a business. When you trade, it’s game time! Be clear about what you intend to do. If you start losing control, take a break to get back into the right state of mind. Much like an athlete.
Pro tips from Jared:
- Take a 10-minute break when you start losing control. Walk away and cool off! Separate yourself from the situation.
- Try to download your thoughts on paper or record yourself when you experience fomo. Reduce some of the emotions by tracking them.
Jared suggests approaching the mental game of trading like going to the gym. Start building strength and a strong foundation over time. Make it sustainable! Proof that you can manage fomo and yourself on days that are tough.
In Jared’s experience, you can make a lot of progress within 30 days, but it will take 90 to180 days to see full proof. Intellectually we might hate losing, but we must upgrade our thoughts and feelings and see the long-term picture.
Thank you, Jared, for your valuable insight!
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Book Suggestions from Jared:
Tendler, Jared: “The Mental Game of Trading”
Get Jared’s free data collection work sheet on his website:
Additional resources can be found here: Top Trading Resources for Enhanced Performance | BTheTrader
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