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In the case of cryptocurrency, FOMO is popular due to enormous and rapid gains. However, as more people realize these great opportunities, they are afraid they will miss them.
When you think you can win a particular cryptocurrency, you buy it in huge numbers. However, as numerous investors and traders believe blockchain and crypto are in the early stages and have excellent development potential, FOMO appears to be more than just a driving force in the market.
However, because of the many traders, FOMO may cause crypto to skyrocket (moon) to unnatural rates. At the same time, when the FOMO passes, there could be a significant pullback.
What is FOMO?
FOMO is short for Fear of Missing Out. It happens whereby an investor gets a fear of missing out on an ample opportunity in the market. FOMO affects everyone, ranging from newbies to professional crypto traders.
FOMO is ubiquitous today because of social media, which gives insights into other people’s lives. For example, one might see that other traders are more successful or are making certain decisions. In turn, they get very high expectations, need more confidence in their investment choices, and make rushed decisions.
Emotions are a huge factor when it comes to FOMO. Such emotions include greed, fear, jealousy, anxiety, and excitement. If unchecked, traders may neglect sound trading strategies and exceed high levels of risk.
Crypto Signals to Look Out For
Even though FOMO is an internal feeling, most of the pressure is external. Hence, there are crypto signals that can help you to identify and stop yourself from FOMO.
The most basic indicator available is the trading volume. A specific time frame depicts the importance of trade activity represented by bars on the chart.
The volume often needs to be added because of its simplicity. The pro traders don’t want you to realize that there is much more information on the importance than it used to be. Nevertheless, the volume offers some of the best trading signals in cryptocurrency.
The volume and prices can indicate whether the momentum increases or decreases. You can therefore detect possible reversal points by looking at their importance. If the price falls, look for more volume to support the movement and lower books in the purchase phases.
If the price is upwards, consider reducing volume with substantial volume that supports the upward trend during pullbacks. Conversely, if you notice several high-volume candles that do not keep the present trend, it can indicate an impending reversal.
The difference between the two lines or pathways is what divergence means. Other indications can move in another direction when the price advances one way. For inexperienced traders, divergence may not mean anything. However, professional traders know they should study divergence because it provides crucial market analysis signaling.
There are four divergence types;
- Bullish – the price shown is a lower low but indicates a higher low on a corresponding indicator.
- Hidden bullish – price seen is a higher low, while a lower low is viewed on a corresponding indicator.
- Bearish – during the bearish divergence, the price shown is higher, but the indicator is slightly lower.
- A hidden bearish – price indicates a lower high, but a higher price is displayed on another indicator.
Unusual Coin Movement
However, there are times when a particular coin suddenly rises substantially without a real reason. Such insight can be seen in the coins price chart. Another thing that you should note is that the coin will be advertised a lot using paid news articles.
This created FOMO around investors because people are talking about it and how they are investing. Such a coin will attract investors because they think they will make a fast buck. For the most part, the cash will rise steadily, and when it reaches a peak, the price will drop suddenly.
The easiest way to avoid them is to understand that you are definitely among the last if you get free information about a pump. The odds of selling at the peak are impossible because the group will sell before you even know about it.
In this case, you can start by doing a background check of the coin. This includes price charts, developers, market cap, and general trends. Also, it reveals why it has received so much publicity.
The RSI, Relative Strength Index is a momentum indicator showing overbought or oversold situations. Because of the volatility of crypto markets, technical indicators guide plotting entry and exit points. The RSI is hence reliable for investors.
When an asset is overbought, the RSI value indicates 70% or more, while at 30%, it is oversold. When it is overbought, it shows that a downtrend is coming. If it is oversold, this indicates that an uptrend is on its way.
RSI is the source of various strategies for trend trading. A frequent marketing tactic is a purchase or sale when RSI hits or passes the middle line showing the beginning of a new trend. Using an RSI will give you insight into the market and act accordingly, removing most FOMO fears.
How to Manage FOMO
Once you have identified FOMO, it’s time to learn how to manage and deal with it. Read on;
Most of the information about crypto that causes FOMO is online. If you spend too much time looking at the news and people’s thoughts, you will end up with even worse FOMO. If you could instead try stepping aside for a while as you shift focus to other activities in the meantime, that would be great. This rids anxiety and prevents you from making wrong investment choices.
There are over 4000 cryptocurrencies. Out of those, most of them are shitcoins, and that’s just the fact. Some of them are startups that may not necessarily grow, about 80%.
The 80% that fail pretend to bring revolution and innovation into crypto. FOMO- driven investors tend to hop on the projects in the hope of making some quick cash, and this fails
Explore Cases of Loss Due to FOMO
Instead of focusing on rare success stories, try searching for significant loss cases. You can also ask people to share their negative experiences in social media groups.
When you do more research, you get more eye-opening results that may die down your FOMO.
FOMO has and will always be there. However, this does not mean you have to fall victim to it. Instead, the article has shed light on identifying and stopping yourself from destructive FOMO. The main point is that you should learn more about the crypto market and explore the pros, cons, and drawbacks.
Enter JOMO. It stands for Joy of Missing Out. It pays to take a step back, collect your thoughts, and appreciate your space and routine. Adjusting thought patterns might take a while, but it is possible to deal with and eliminate FOMO.