What does “FOMO” means and how to deal with it ?
There is no doubt you must have heard about this before. This term is one of the most used in crypto slang by most of the influencers, or crypto investors. But what is FOMO, and how does it work ? What can we do to prevent it from happening ?
FOMO is an acronym for “fear of missing out.” FOMO is a common feeling among investors in cryptocurrency. The constant fear of missing out on the next big thing can lead to impulsive decisions and can be detrimental to your investment strategy.
FOMO is often used as a term to describe the hype surrounding a particular coin or project. The media plays a big role in amplifying the FOMO surrounding a project.
FOMO can lead to impulsive decisions and can be detrimental to your investment strategy.
Why are we humans influenced by FOMO ?
There is no single answer to this question as the psychological effects of FOMO can vary greatly from person to person. However, some possible roots of this psychological phenomenon could include feelings of insecurity, envy, and anxiety.
Additionally, FOMO can often be triggered by social media, where people are constantly exposed to the highlight reel of others’ lives and can easily compare their own lives to those of others.
What is the origin of this phenomena ?
Let’s get back to the origins of human race. From a psychologist perspective, social interactions in a prehistorical era would likely have been based on survival and reproduction.
Social interactions would have been focused on forming and maintaining relationships that would help individuals and groups survive and reproduce.
There would have been a lot of emphasis on developing cooperative relationships and working together to accomplish tasks. There would also have been a lot of emphasis on forming relationships with members of the opposite sex in order to reproduce.
In other words, human brain is conditioned by the fact that he must do what others do, in order to socialize, thus survive.
Furthermore, humans are conditionned to replicate actions or decisions in order to facilitate socialization, but also understood that replication could save you time, on learning an information you don’t have.
Let’s take an example : if you see a group of people screaming and running in a direction in front of you, it will be natural to run in the same direction, rather than going in the opposite direction.
As a reflex, and instinct, you will consider that there is a danger, and they are all trying to escape it.
It is psychologically very hard in this situation to run in the opposite direction.
The FOMO effect in finance
The fomo effect in crypto investment is based on this phenomena, but completly repurposed to our modern era. If you see a coin price explode, you don’t want to be the only one who missed the opportunity, you also want to enjoy the benefits of this increase. You can’t be the only person who didn’t buy and is missing the financial opportunity to provide for your family, close relatives.
You consider that if it’s going up, and everyone is taliking about it, it means that there must be a good reason, so you replicate the action of buying it.
The only issue here is timing. While you buy just like everyone else, you buy at the wrong time, because the token probably has already gone up, and it’s much likely that he is going down now, making you loose money.
Remember : If everyone is now talking about it, it’s probably already too late.
If you feel like this happened to you, or is currently happening, here is some key points to get rid of this phenomena.
How to deal with FOMO effect
How to get rid of FOMO effect ? There is no one-size-fits-all solution to getting rid of the FOMO effect, as each person’s experience with it will be unique.
First of all, it is important to understand, and identify this phenomena. If you know what it is, and how it works, you will be more likely to fight it and resist.
If it’s happening to you in investment, here is what you can do to prevent it.
Have a plan
Before making any investment, be sure to have a plan in place. This plan should include your investment goals, your risk tolerance, and how much you are willing to invest. Having a plan will help you to stay focused and avoid making impulsive decisions.
Do your own research
Be sure to do your research before making any investment. You must have already heard hundreds of time the famous “DYOR”, which means do your own research. This includes understanding the risks involved and knowing what you are investing in. Investing without doing your research is a recipe for disaster.
Once you have a plan and you have done your research, it is important to stay disciplined. This means sticking to your plan and not letting emotions take over. When emotions take over, it is easy to make impulsive decisions that can lead to losses.
Have realistic expectations
Investing is not a get-rich-quick scheme. It takes time and patience to see results. Be sure to have realistic expectations and don’t expect to make a fortune overnight.
Have a long-term perspective
Investing is a long-term game. It is important to think about your investments in the context of the long term. This means not selling when the market is down and not buying when the market is up. The best way to avoid the FOMO effect is to have a plan, do your research, stay disciplined, have realistic expectations, and think about your investments from a long-term perspective.
Tips to get rid of FOMO
If you experience this effect in other aspects of your life, with social medias as an example, here is some important tips you can follow :
- focus on your own happiness, setting boundaries with social media, and being mindful of your thoughts and emotions
- Avoid multitasking, and focus on one thing at a time
- Try not to compare to others, but only to you, and focus on self improving than beating others
- Value relationships, spend physical time with your friends
- Do sports. With time, this will boost your confidence and increase your pleasure hormone such as dopamine and endorphine
Additionally, it can be helpful to talk to someone you trust about your experience with FOMO and to seek professional help if you feel like it is impacting your life in a negative way.