FOMO in Trading:
Why It’s a Silent Account Killer and How to Conquer It
Hello Traders!
Today I’m going to discuss something that personally afflicts me on a constant basis. I know that every trader has experienced that sinking feeling when you miss a trade that would have been perfect. Maybe you hesitated, got distracted, or didn’t trust your analysis at the critical moment. Whatever the reason, you watched from the sidelines as the trade ran away without you. And then, that dreaded sensation starts creeping in—FOMO.
Fear of Missing Out (FOMO) is one of the most common and destructive emotions in trading. It’s that powerful urge to jump into the market at any cost, even when you know deep down that you’re no longer at an ideal entry point. FOMO is sneaky—it makes you abandon your rules, chase prices, and, ultimately, take impulsive actions that hurt your account.
But here’s the thing: FOMO doesn’t just strike when you miss a trade. It’s just as powerful in a slow market. When the price action is sluggish and opportunities are few and far between, you might feel the need to force something to happen, to see a setup that’s not really there because, well, you just want to do something. Before you know it, you’re deep into a trade that has no edge, wondering how you ended up there.
This post isn’t just about explaining FOMO—it’s personal for me. FOMO has been one of my biggest hang-ups in trading, and I’m not alone. It’s a killer of discipline, patience, and, ultimately, accounts. So let’s break down why FOMO is so damaging, how it manifests, and most importantly, how to conquer it.
Why FOMO Is So Dangerous for Traders
FOMO can ruin your trading plan faster than almost any other emotion. Here’s why:
Chasing Moves Far From Your Ideal Entry: When you miss your planned entry, the market doesn’t care. But FOMO makes you feel like you have to catch that move right now, even if you’re entering at a much worse price. Suddenly, the trade that would have had a great risk-to-reward ratio becomes a chase, with little room to run before you hit resistance or the trend reverses.
Seeing Setups That Aren’t There: FOMO distorts your perception. In slow markets, when opportunities are scarce, your mind can trick you into believing that a subpar setup is a golden opportunity. You convince yourself that a low-probability trade is worth taking simply because you want to be in the market, rather than sitting on the sidelines.
Increased Frequency of Trades: FOMO often leads to overtrading. You start taking multiple positions, each with less conviction and more desperation, as you try to compensate for the “missed” profits. This results in trading fatigue, poor decision-making, and a rapidly shrinking account balance.
Emotional and Financial Rollercoaster: The emotional highs and lows triggered by FOMO can drain you mentally. If you end up chasing a trade and it goes against you, the pain is far worse because you knew it wasn’t a good entry. That frustration can lead to revenge trading—another deadly cycle of emotional decision-making.
The “Need to Make Money” Trap: Perhaps the most damaging aspect of FOMO is when it’s tied to financial need. When you feel pressured to make money—whether it’s because you’re down for the month or need to pay bills—FOMO can be crippling. It clouds your judgment and makes you abandon all logic. Instead of waiting for a high-quality trade, you start jumping into anything that looks like it might work, but deep down you know it’s not a good setup.
My Personal Battle with FOMO
I’ll be the first to admit—FOMO is something I struggle with constantly. It doesn’t matter how long I’ve been trading; it’s a challenge I still face. There’s nothing worse than missing your ideal entry on a trade you’d been planning, only to watch it take off without you. When that happens, my instinct is to jump in, even though I know I’m breaking my own rules. And I pay for it almost every time.
It’s even worse when the stakes feel high. If I’m going through a tough period or I really need a trade to work out, the FOMO becomes almost unbearable. I’ll end up taking a trade way outside my ideal zone, only to watch it reverse against me—because I knew, logically, that it was no longer a good setup. And here’s the kicker: that loss stings way more than a regular trade gone wrong because it feels like a self-inflicted wound.
Then comes the aftermath: I’ll either undersize the next high-quality setup out of fear or start trading impulsively to “make back” what I lost. It’s a cycle that can spiral quickly if you’re not careful.
How to Conquer FOMO and Stay Disciplined
If FOMO is such a powerful emotion, how do we conquer it? Here are some strategies that have helped me tame FOMO over the years:
Have a Written Trading Plan and Stick to It: A solid, detailed trading plan is your first line of defense against FOMO. Before every trade, outline your ideal entry, stop loss, and target. If the market doesn’t hit your criteria, then it’s not your trade. Period. Write it down, refer to it, and remind yourself of the consequences when you break your rules.
Set Alerts and Use Automation: Use alerts to notify you when a stock reaches your ideal entry zone. This helps you avoid staring at charts all day and getting caught up in the emotion of the moment. Better yet, consider using automated entry orders for certain setups so you don’t fall into the temptation of manually chasing moves.
Trade Small When FOMO Hits Hard: When FOMO is raging, cut your position size in half or even smaller. This way, you’re still participating, but with much less risk. If it’s a good trade, you can always add more. But if you’re wrong (which FOMO trades often are), the loss won’t be as devastating.
Embrace the Power of Sitting Out: Learn to love sitting on your hands. Not trading is a position, and sometimes it’s the best position. The market will always be there tomorrow, next week, and next month. Your goal isn’t to catch every move; it’s to catch the right ones.
Review and Learn from Your FOMO Trades: Keep a log of your FOMO trades. Write down what triggered the FOMO, how it felt, and what the result was. Over time, you’ll see patterns emerge, and just being aware of these triggers can help you recognize and avoid FOMO in the future.
Shift Your Focus from Profits to Process: Instead of obsessing over making money, shift your focus to trading the plan. Celebrate when you stick to your rules—even if it means missing a trade. Remember that your goal is to follow your process, not to chase profits.
Final Thoughts
FOMO is a silent killer in trading. It’s sneaky, convincing, and always lurking in the background, waiting to derail your discipline. But like any bad habit, it can be conquered with awareness, a solid plan, and a strong commitment to trading the right way. Remember, there will always be another trade, another opportunity. Your job is to stay patient, stay disciplined, and wait for your setup.
Until next time—trade smart, stay prepared, and together we will conquer these markets!
Ryan Bailey
VICI Trading Solutions