If you ask people what they would do with a time machine, you would get “Buy BTC pre-2017” as an answer so many times. Now, everyone knows that time travel is impossible, but recognizing the next BTC and making a purchase before it explodes is not. This is what makes so many people susceptible to FOMO when investing in crypto.
In order to make data-based decisions, it’s vital that you understand your FOMO. This will be the first step in actually being able to control it. With that in mind and without further ado, here are a few great tips for FOMO management that will actually be of use.
- Find credible sources of news on new cryptocurrencies
FOMO doesn’t just occur out of the blue. There are so many reports and opinion pieces, and they all sound decisive and fact-based. Each of them tries to convince you that the coin they’re selling or promoting is the next BTC and that you’ll be able to buy it at $0.001 per token and, at one point, it might even surpass Bitcoin.
Of course, none of this is true.
Even if the results are great in the future, no one knows that something will be worth hundreds at a moment when its value is less than a dollar. There are often strong indications that a token might do well, but often the creators of these reviews either have a personal incentive (they’re part of the development team), or they just take care of their own content.
You want to be skeptical. This will be your main shield against FOMO. At the same time, you don’t want to be too skeptical. You see, just because a coin is new, this doesn’t mean that it doesn’t hold any value or that it won’t grow in the future. There are many amazing examples of this. As Michael Graw says, new cryptos have the potential to turn small investments into huge gains, as demonstrated by the recent success of PEPE, which grew 7,000% in just two weeks. He adds that a good whitepaper, a presale or ICO, and a small initial market capitalization are all promising signs from a new coin (source: https://www.techopedia.com/cryptocurrency/new).
After all, the key to making real money as an investor is buying low and selling high, but you can’t always wait for the value to dip. Instead, you want to be an early adopter and recognize a coin whose value is yet to live up to its full potential.
- Split your safe and risky trades
Diversifying is a sound idea when it comes to protecting your funds, but it doesn’t mean too much without actually setting a budget for each of these investment brackets. What do we mean by that?
Well, how much are you going to use to buy major cryptocurrencies (BTC and ETH), and what will you split across these riskier investments? By having a budget for your risky trades, you’ll never feel the pressure of FOMO. Why? Well, because you do have some money, you can pursue this latest trend.
Don’t get us wrong, there’s nothing bad about getting some ICOs or cryptocurrency presales; however, you need to understand how these investments work. You see, buying just one ICO isn’t really a good idea. They’re cheap, to begin with, so why not get some coins here and there? This way, when you win, you win big, and when you lose, you lose small. In fact, just one of these wins will be enough to make up for everything you’ve lost and more.
Just keep your eyes on the prize and understand why you’re doing this.
Also, the most important thing you need to understand is that even risky investments are investments, and you need to have a strong (data-based) reason for investing in this particular crypto. Otherwise, you should just go to a crypto casino and place a bet. This way, you get an immediate adrenaline rush from your impulse decision, and you don’t have to wait for months to see if your investment pays off.
- Establish investment rules
The main reason why you’re setting investment rules is because you can make decisions while you’re still level-headed. Once you start winning or losing money, you’ll get a bit more emotional, which means that you’ll find yourself in a position where you won’t be able to make data-based decisions all the time.
This way, even when the FOMO sets in, you have some of these safeguards to keep you in check. In a way, this is past you (or present you) taking care of the future you. At the very least, it’s taking measures to prevent yourself from messing up in the future.
The first such step lies in setting an investment budget. This is something we’ve previously hinted at, but now it’s time for us to flash it out some more. The problem is not FOMO. The problem is that people hear that there’s a new trend and sell their houses to get the money to invest. When you have a budget, you know how much you can get exposed, regardless of what the investment is.
Second, picking a strategy can be quite helpful in this regard. Why? Well, it’s a really quick reality check. Sometimes, a coin will seem ideal, but once you start trying to make it fit your strategy, things just won’t seem like a good fit. This is a last stop before you commit, and it allows you to track this process carefully every step of the way.
Stop orders are your last line of defense. These are self-executable trades that you merely set up and let them play out. Automated orders are not susceptible to psychological phenomena like FOMO.
- Logic over emotion
There are a lot of fact-based opinion pieces talking about how BTC will become one of the biggest assets out there. Then, you have all those predictions about how the BTC is bound to break the 100k barrier (which is an arbitrary psychological barrier, more than anything else) at one point in the near future.
While all of these claims have some factual foundation, the truth is that no one can tell when this is going to happen. At one point in the near future, BTC will dip and rise, and then it will dip and rise again.
The problem is that every time BTC increases its value by just one iota, everyone believes that this is the big break that they’ve been waiting for. Yesterday was the last moment of value going down, and now the value has increased, and there’s no going back. This is, of course, factually completely impossible. The only way why people believe this is that they let emotions rule over them, not logic.
One last thing you need to keep in mind is that these emotions that we’re talking about aren’t necessarily positive. It’s not like people get on board with a promising stock as soon as its value increases just a bit. If the history of stock market crashes taught us, it’s that a negative emotion can be much more potent. Nothing in this world can match the speed of scared people rushing to sell at the first sign of trouble.
Letting fear determine your trades is never a good idea
The most important thing you have to keep in mind is the importance of not letting fear govern your trades. When trading, you have to govern yourself by logic, and FOMO is the furthest it gets from here. Just stay informed and create a system that will make it impossible (or at least, really hard) to make these types of mistakes.
