When I went online this morning my WhatsApp notifications started pouring in. The cause of this is the price of Bitcoin, which has reached a price of almost $ 11.000,00. These are Bitcoin price levels that we have not seen since March 2018. Since December 2018 the price of one Bitcoin has risen about 240 percent.
I can’t help thinking about November 2017, sitting in the office with my colleagues. We were all opening accounts with cryptocurrency exchanges and buying all the cryptocurrencies we could get. There was a real smell of FOMO in the air, the fear of missing out.
What is FOMO?
FOMO is the fear of not being included. The fear that others might have a rewarding experience from which one is absent. FOMO is very much a psychological state. A state of concern that we are missing out on an opportunity for a profitable investment for instance.
The phenomenon of FOMO was first identified in 1996 by a marketing strategist called Dr. Dan Herman. Since the introduction of social media and smart phones, FOMO is now everywhere. After all we do have access to what our friends are doing and what is happening in the world at any given time. FOMO is therefore a direct result of social media addiction.
FOMO in investing
In trading psychology plays an important role. In day trading it might even be the key factor to success. We all know that emotions like fear and greed can have a negative impact on trading decisions. The question is if mastering psychology in trading can really make one a successful trader. Or maybe the role of psychological factors like FOMO is just too big.
It is not a surprise that a marketing strategist was the one that identified the phenomenon of FOMO.
Companies and brands use FOMO all the time in their advertising and marketing campaigns.
Taking emotions out of trading seems one way to avoid stress and FOMO. Algorithmic trading might offer a solution here. For more information about the advantages of automatic or algorithmic trading click here.
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