The term Fear of Missing Out (FOMO) is known as "the fear of missing an opportunity" in psychology. FOMO is defined as the feeling of individuals about missing out on anything related to an opportunity or a product. During FOMO, a person feels like they are missing out on a situation or experiences that others are experiencing. FOMO also carries the meaning of fear of regret. This situation can cause individuals to miss out on new experiences or profitable investments by acting with a fear of making the wrong decision.
In the finance industry, the term FOMO describes the fear that traders have of missing potential investment opportunities. The feeling of FOMO is often seen when an asset experiences a significant increase in value over a short period. FOMO can be seen in the news or in comments from others. FOMO also means that an investor is concerned. The desire to be a part of the majority and to achieve the gains obtained by others' investments is dangerous for an investor who falls into FOMO. A person who falls into FOMO can experience losses by taking risks that should not be taken without doing research.
Some emotions caused by FOMO are as follows:
- Greed
- Fear
- Excitement
- Envy
- Impatience
How FOMO Came Out?
The concept of FOMO was introduced in an academic article titled "Brand Management Journal" by Dr. Dan Herman in the 2000s. FOMO was later used in an opinion piece published by Patrick McGinnis in The Harbus in 2004 and further popularized in an article titled "Two FOs " by McGinnis.
What Is FOMO in the Cryptocurrency Market?
In the cryptocurrency markets, the term FOMO arises when a person invests in any cryptocurrency without verifying information. FOMO in cryptocurrencies can lead individuals to engage in transactions such as buying assets at their highest prices or selling them at their lowest prices, which can result in losses. The probability of a FOMO-driven investor experiencing losses is higher. Therefore, individuals should research the asset they plan to invest in and act thoughtfully rather than emotionally.
Some effects of FOMO on individuals are:
- Constantly checking past price movements of the cryptocurrency invested in or planned to invest in.
- Getting excited by monitoring developments related to the relevant cryptocurrency.
- Performing unplanned trading transactions with a fear of missing an opportunity during sudden price fluctuations.
How to Deal with FOMO in Cryptocurrency Market?
Some tips for investors to minimize the impact of FOMO include:
- Using a trading journal that records all investments or transactions made and includes strategies, plans, and emotional situations.
- Creating a trading plan to avoid transactions made out of FOMO.
- Developing a risk management strategy.
- Conducting research before investing in an asset.
Comparison of FOMO and FUD
The term FUD means fear, uncertainty, and doubt. FUD can cause cryptocurrency prices to decline due to negative news and comments spread via social media. Usually, these news items are not based on facts. FOMO, on the other hand, involves investors making decisions based on their emotions. A person who is experiencing FOMO may believe they will miss out on an opportunity, leading them to buy assets at high prices or sell them at lows. A common feature of both FOMO and FUD is that they involve emotional states.
