How To Combat FOMO When Investing
FOMO, short for fear of missing out, is a type of social anxiety that grips everyone. Perhaps it is slightly more common among investors who want to make sure they are making as much money as possible. FOMO forces investors to bypass logic and the trading strategies and risk management plans they've set to protect their capital. Here are four tips on how to combat FOMO when investing:
Keep a Routine Going
Build a routine outside of investing that fills your waking hours; otherwise, you'll be glued to your screens and looking at prices all day long, which eventually leads to buying or selling out of FOMO. Establish investing hours, such as 8 AM to 5 PM, while doing other activities outside of those hours. This could be anything from hitting the gym to spending time with family.
Invest Small
Investing a nominal amount of money can satisfy your urge to play the markets at all times. It's a simple but effective hack that combats FOMO without putting your portfolio at risk. For instance, if you are getting the itch to short a stock, only invest one percent of your usual trade order size. This gives you the consequential feeling of satisfaction of being a "player" in the market.
Diversify Your Assets
With so many investment categories to choose from and more options to choose from each of those categories, investors get FOMO'd not knowing when the next big market move will come. Not only is it an excellent way to combat FOMO, but diversification is also a time-tested way of minimizing investing risk. Diversification allows your portfolio the proper protection from significant problems in any single market or space.
Limit Your Sources
Keeping too many sources of information and investing leads can also give you FOMO. While well-intentioned, the unsolicited advice and investment ideas you get from family, friends, and coworkers can make you think of the money you could be making. Of course, these sources aren't always reliable and, in most cases, are wrong.
FOMO is one of the leading causes of why investors lose money over time. Take control of your emotions and safeguard your capital by using the four aforementioned tips in this article.
Disclaimer: This article is meant strictly for informational purposes. Not intended as financial or investment advice. Do not misuse or misconstrue the information in this article. Seek advice from your personal financial advisor on matters pertaining to investments/finances.
This article was originally published on wesleyoleriv.com
Articles from Wesley Oler IV
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