What exactly does it mean?
Well it is as easy as it sounds. It is the fear of missing a trade. The fear of not to get as much as possible out of a trade.
This is a mental mistake every newbie trader is doing. Even experienced traders will make this mistake from time to time.
We always want to enter at the highest or lowest point of price changing direction.
And what it makes even worse....there are a lot of scamming people out there, that tell you they would have the perfect strategie to do so. Showing fake pictures of fake trades.
But lets have a closer look now at a chart to see the meaning of FOMO.
Example:
In this picture we see the Gold Chart H4. We can see that the price first was in a strong uptrend. After breaking the Trendline (red line) a correction started. This correction looked more and more like a Bullish Flag Pattern. Before the price falls below the lower Flagline we would have guessed the price will go up again. But this didnt happen.
So what would had happened if we would have make the FOMO Mistake. In this Example we would have entered the trade at any point inside the Flag Pattern Lines. The higher we entered, the higher our mistake would had been. If we had entered at the lower Flagline our Loss would not had been this much, if we set a close SL. But if we had entered near the upper Flagline, our loss would had been huge, because ususally we set the SL below the Flag Pattern (always hoping to be right and the price turns into our suggested direction).
What is the solution for FOMO?
Well, this is also quite simple. Stay calm and wait. Wait for a price confirmation. You probably will make less money with a single trade, but you can avoid a lot of losing trades with this.
In our Example above, it would have ment to wait, until price breaks through the upper Flagline an confirms the bullish Flag Pattern. (orange circle)
We would have missed a huge move inside the Pattern, if price would have rised, but we would also avoid a losing trade here, just with waiting and be calm.
FOMO is a mental problem we have to solve in our brain an by our own. No one can help us with it.
Even if it sounds frustrating, we have to learn it ourselves Thats all for now.
Next Post will be the "Secret" of a Head and Shoulder Pattern, that will help you to avoid even more losing trades. A secret that nearly no one tells you when talking about HS Pattern.
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