Fear Of Missing Out Is Tough To Overcome

Some people are afraid of heights, some are afraid of spiders, others are afraid of their own shadow.  But most of us market players are afraid of missing out, one of the four major fears of trading.

The worst feeling a trader/investor can have is seeing the market going up without them.  Even if the reasons for exiting were sound and proper, there is a feeling of loneliness when everyone is long and you're not.  It makes sense, we live in a society where we like to go with the herd - it's warm and cozy and if we lose money then hey, it's fine so is everyone else.

But markets are fickle, sentiment sways and money flows come in and out at a constant rate.  We never know when the money is going to flow nor in which direction, but we can get a clue by looking at price action first.  When it's ugly, as it was most recently, our best move is often to head for the sidelines, where it's safe from dangerous conditions.

The next question is often when to get back on board the train.  Timing is always an issue.  Recently, we saw markets nosedive and record some of the lowest oscillator readings in history, easily in the top 5.  Was that a sign of a washout, sellers exhausted? Not even close, because the markets went much lower after those readings.  

If you bought that first low, in late January, looking for a bottom you were badly burned. Many stayed on the sidelines, a smart thing to do.  But then on January 28th, late in the day a monster rally ensued out of nowhere, and followed through the following day.  To watch the markets rising up some 4% in less than two trading days was painful if you were on the sidelines, the ultimate FOMO. Now it becomes even harder, because of the psychological disadvantage (am I chasing?).

In the end, we should not fear missing out. If moments happen when we should be out of the market, then we have to oblige.  Those are not common however, but the market's main objective is to make you look foolish. If you're trying to time the market with entries, you'll surely suffer from FOMO, and the market will make you look like a fool.