Fear of missing out (FOMO)

Despite the relatively recent appearance of the term in the lexicon, the phenomenon itself is far from new. FOMO has influenced behavior in the past. The most vivid and widespread example is the Dutch "tulip mania" in the 17th century.

Back then, speculators joined the sale of rare tulip bulbs, which had previously interested only a narrow circle of gardeners. Buying bulbs became increasingly difficult, while the demand for them grew larger and larger. As a result, this led to an avalanche-like rise in prices for completely different varieties, with prices reaching fantastically high levels, ultimately resulting in the collapse of the entire tulip market.

"Buy! Sell!" Investors, bloggers, and analysts publish screenshots of their successful transactions, showcasing tens and hundreds of percentage gains.

If card players say, "If I had known, I would have lived in LA," in the crypto investor community, the thought often crosses their minds, "If I had bought bitcoin in 2014, I would have bought a Lamborghini by now."

The FOMO effect often leads to constant and obsessive worry. A person becomes obsessed with the idea that others are making profits from investments, while they are missing their last chance.

The atmosphere of someone else's success, achieved by simply "pressing a button," only fuels the investor's anxiety. It seems to us that we are constantly missing opportunities: lucrative deals, the next surge in the crypto market. "If only I had bought it a year ago, I would have already bought a house/car/boat/airplane..."

Most investors still lament not buying bitcoin when it was worth less than a dollar.

All of this tempts us to "jump into the last car of the departing train." In fact, this phenomenon is so widespread that, according to a study by consulting organization Deloitte, it became one of the factors driving the growth of cryptocurrencies in 2017 and 2021.

People rushed to invest in the crypto sphere simply because they were afraid of being left out of the new trend. Such a massive influx of private investments into the open market only fueled price growth and attracted even more new investors. Some crypto investors openly stated that the fear of missing out was their main motivation for buying.

"You will miss the next Microsoft! You need to invest right now because Bitcoin is already growing and will continue to grow!"

When an investor makes a purchasing decision based on emotions or the popularity of a company and its executives, acting out of fear of missing out while others profit, that is FOMO.

Fear of missing out (FOMO) is purely a psychological factor that is influenced by several emotional states:

• Fear - investors fear future regrets about missed opportunities.
• Greed - investors buy or sell without hesitation, unwilling to lose profits.
• Anxiety - investors worry about missing out on buying an asset before it becomes more expensive. 
• Envy - investors envy those who have joined the market movement before them.
• Impatience - investors incorrectly assess the current market situation.

Although the term FOMO includes the word "fear," it can be better characterized as anxiety. People focus not on their own actions and feelings, but on what others are doing.

What does this lead to?

When looking at other investors during market growth periods, many newcomers do not want to miss the next lucrative opportunity. In an attempt to avoid future regrets, they are willing to buy assets that have already risen in price significantly because they don't want to miss out on any profits. This often explains the rapid growth of various "junk" cryptocurrencies in the market.

And the scariest part of this situation is that many investors have indeed made a lot of money simply by following the trend. However, just like trends start unexpectedly, they also end unexpectedly. High risks eventually result in losses.

When greed kicks in and self-reproach of "why didn't I pay attention to cryptocurrencies earlier?" arises, it often ends in failure.

"What if I still have time?"

Then the investor starts losing their capital and, instead of a rational strategy, tries to make up for it by making even more impulsive purchases.

Interesting fact: as a response to emotional burnout caused by FOMO, a relatively recent approach to life has emerged among young people called JOMO (Joy of Missing Out). It emphasizes listening to oneself and living consciously, in line with personal values

How to avoid FOMO?

The most important thing is to realize that there will always be profitable opportunities in the future. The past is not the end; there will be plenty of different opportunities in our lifetime.

After that, it is necessary to reduce the degree of responsibility for the decisions made. A trading plan, a pre-defined trading strategy, can help with this.

With a good plan, you won't buy an asset that you haven't thoroughly researched. Analyze the market, describe your strategy, and then mark the entry points into the market and levels for taking profit and acceptable loss. The specific strategy will be up to you, as long as it is effective for the asset you are working with.

A trading plan will help you become a true professional!

Here are some more tips from professional psychologists and economists:

• Pay less attention to the news - its influence on prices is overestimated, and it influences you.
• Don't be excessively optimistic - a good news background can be as dangerous as a bad one.
• Act against media advice: buy when everyone predicts a crash and sell on good news.
• Forget about the past - if you missed a certain growth, it's too late to regret it; don't rush and look for new opportunities, there will be many more.
• Act according to your own strategy - don't buy cryptocurrency just because you hope for its growth; look for real justifications for buying.
• Take profits in stages - this will help avoid regret in case of a possible continuation of growth.
• Use stop-loss orders - they will automatically close your trade when the price reaches a critical level, minimizing your losses.

Experienced long-term investors understand that it is never too late to buy assets; what matters is being informed and making informed decisions. Keep a clear mind and don't succumb to media influence.

Invest wisely, thoughtfully, and regularly!