Most new traders are easy targets when it comes to falling into a FOMO trap. FOMO stands for “Fear of Missing Out” and usually occurs when there’s a lot of hype around a new project or a new development in an established project, that traders are scared of missing out on. But here’s the thing, giving into FOMO can actually be hugely detrimental to a crypto trader’s efforts. We’ll be looking at how to avoid falling into a FOMO trap, so that you can keep your trading efforts sustainable and avoid giving into hype. Here are 5 questions to ask yourself:
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1. Does this sound like paid hype?
The first question you need to ask yourself when you’re trying to avoid falling into a FOMO trap is: Does this sound like paid hype? Paid hype essentially means that a crypto influencer or other’s in the cryptosphere have been paid to hype up a particular project, usually without knowing whether or not it actually has a chance of being a success in the long run.
This can be particularly impactful on new traders, who often look to figures in the crypto industry to direct them towards sound and secure projects. Unfortunately, many people are in it for the money, and may promote a scam without much care. If you’re hearing about a project from an influencer, be sure to do your own research thoroughly before considering buying in. Doing your own research is vital to making a successful trade. And if something seems odd, definitely wait the FOMO out.
2. Are there a lot of controversial statements being thrown around?
Maybe you’ve heard about a new platform and have done your own research, but there are a lot of conflicting and controversial statements being thrown around. Firstly, good for you for doing your own research. However, if opinions are generally conflicted about a coin or a project, it’s probably a good idea to wait a bit and see what happens.
Often, conflicting information is a sign that a project is unstable or too risky, and you’d be better off sitting it out. You can always buy in later if it seems like things are going well, but don’t give in to FOMO if you’re uncertain. Risky trading doesn’t make you a better trader, it is
far more beneficial to be cautious and to make the right decisions.
3. Who is the authority pushing this information, and can you trust them?
Do you know if the person or entity promoting a certain project is trustworthy? If you’re skeptical, you should probably stay away. Unfortunately, there are some individuals and authorities that use crypto and crypto trading to take advantage of people, especially people who are newer to trading. When you see someone pushing a particularly project, ask yourself whether or not they themselves are trustworthy, and whether the project that they’re promoting seems viable or realistic.
Ultimately, if neither seem legit, you should most likely stay far away. You can always keep an eye on the project and buy in at a later stage.
4. Has this been done before?
When looking into a project, you should definitely ask yourself, “Has this been done before?”. If the answer if yes, you would be better off avoiding the project altogether. Why? Well, it would make more sense to buy into the original project, than into a knock off. We’re not talking about something like a hard fork, because that’s a different situation entirely, but rather projects that seem eerily similar to other platforms that are operating under somewhat false pretenses. Those projects are most likely going to fail, as they don’t provide anything new to the cryptosphere.
5. Does this investment stretch beyond your financial means?
When you first start trading, it’s incredibly important that you evaluate how much you can afford to trade with, and start from there. If a project requires an investment that is outside the realm of affordability for you, it’s crucial that you don’t stretch yourself just to give in to FOMO. Rather wait and build yourself up to a point where you can comfortably make that investment, and then buy in. Giving into FOMO at a time when you cannot afford to can be especially disastrous.
So, how to avoid falling into a FOMO trap particularly when it comes to your finances? Wait it out.
Now that you know how to avoid falling into a FOMO trap, you’re prepared to take on the world of crypto trading. Bitcoin trading and altcoin trading can feel incredibly daunting to start, but once you’ve got the hang of it you’ll find yourself flying in no time.
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Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.