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What is FOMO & FUD? How to avoid FOMO, FUD in trading coin

FOMO, FUD are 2 terms of psychological syndrome (effect) familiar to almost every trader in the financial sector, especially Crypto. These are two common syndromes that novice traders often encounter with unfortunate consequences. So, what are FOMO and FUD? How to overcome these 2 trading syndromes?

 

What is FOMO?

 

FOMO (Fear of Missing Out) is a more personal thing. Its the fear of missing out on something that others are enjoying (for example the fear of missing out on Bitcoin gains while others are picking out their Lambos). FOMO might drive you to buy into a coin, not take profits on a coin, or not to set stops on a coin that has already gone up considerably.


It is the idea you get in your head that rational profit taking or waiting for a reentry point now will result in you missing out. This fear of missing out is what causes people to buy at the top or hold during a dip after making profits (only to lose some or all of their profits again). People can be said to get FOMO when they act on impulse due to the fear of missing out.

 

What is FUD?

 

FUD is Fear, Uncertainty, and Doubt (often spread on social media or mass media). FUD can cause the price of a coin to drop, not based on fundamentals or charts, but based on bad news that spreads around social media. Many times the bad news isn’t substantiated or grounded in reality, and instead ends up being something silly like a popular talking head’s opinion that Bitcoin is a bubble. The fear, uncertainty, and doubt-inducing idea being spread around media can be referred to as FUD.



How to avoid these psychological syndrome?

 

FUMO and FUD syndrome are common types of syndrome among novice traders who do not have much experience. Therefore, to avoid making the unfortunate mistakes that turn into good prey to be taken advantage of in the market, you need to understand the following rules:

 

Being Consistently

 

One of the core factors determining success or failure in decisions lies in determination and steadfast will. Consistency helps you to distinguish right from wrong, rationality when you have determined the time and patiently follow the plan you have planned. Avoid making mistakes that are out of your expectations and control.

 

Understanding the market

 

Understanding the market is one of the hardest rules to follow. Because even experienced traders do not dare to assert the level of market knowledge. However, from a novice perspective, you need to understand the prerequisite that the market has many opportunities. If you see that the coin has been FOMO and the price is too high, it's best to stay out of the game.

 

Cutting your losses at the right time

 

If you have FOMO and are tripped, don't hesitate to cut your losses. The stop loss at least retains you capital to look for another opportunity.

 

Effective capital management

 

Effective capital management and distribution helps you minimize the risks posed by FOMO and FUD. In addition, good capital management helps you maintain a steady return, then FOMO and FUD can no longer influence your decisions.

 

Determining your investment style

 

The investment style is defined as short, medium or long term, thereby determining how decision making is influenced by FOMO and FUD. Assuming you are in the short term (surfing) style, following the FOMO waves will help you get profits quickly. In contrast, with the medium or long term style, FOMO or FUD bring negative consequences.


In addition, if you want to overcome these 2 trading conditions, keep in mind the following two trader's maxims:

 

"Profits are not for everyone", and

 

"Money goes from the hand of the impatient to the hand of the patient"