Fear of missing out. This is the one of the most common fears among traders, especially beginners. By fearing to miss out on trade you take bad entries, with too big risk and can even destroy your account.
This post I gonna relate to myself, some of my recent trades has a lot of FOMO in them. When I feel I am missing out on big move and take the trade with bad entry and huge risk what is very painful for account. This is one of my biggest stepping stones now. It’s repeating again and again.
Somehow even feeling ashamed to show these charts, but it is how it is. I have to get rid of this bad habit.
Lets start with the recent example from today, 18th of April.
MBIO trades. Recent crazy mover. It moved from 2.66 to highest point of $14 in After Hours trading on 17th of April. News, as we later found out was repeated news and wouldnt do such a big economical impact on company as only 1 from 200000 kids have this illness. What of course is sad and I am happy that at least somebody is trying to help these poor kids.
Saw the first dump in premarket and started to feel FOMO. This stock is going down to $5…
So after missing out on first Pre Market dump, I got in near the lows with set risk in mind of 7.50. Everything was good until I did another add and just right after stock blew past my risk point and was 7.70. Then I started to feel all those stupid emotions due to having larger RED position than planned. Started to think that stock gonna reverse, just wait a little more… And when it hit $8 my pain factor didn’t hold it and I closed the trade. Shit, I am down, big.
So the next trades i took was based on emotions, wanted to get the money back. So was early with entries on next trade… Didn’t wanted to miss out on big move down. And I shorted front side – it’s a clear death sentence.
Somehow managed to hold it through big move against me by being RED quite huge. By adding more on frontside you really dont know where are you stopping out if trade is not working out. So I held with emotions on fire, luckily to me the stock went down, dumped and got back in GREEN. And all of it just by having FOMO early morning and shorting in bad place.
How to improve it? I just have to learn not to take trades on weakness. Trade the rejects!! And go SHORT just on confirmation.
Another chart with the same story…
BPTH 15th of April – here you can see the same pattern repeating again. Feeling FOMO, BAD entry, cut for big loss. Solution is clear – Don’t short on weakness, wait for push to pre market resistance area or previous days high volume resistance area or even Pre Market highs if its not to far away.
And another one…
PHUN – same 15th of April. Again FOMO, BAD entry, cut for big loss. If you really take trade in such a position, where is your risk?
Solution – dont SHORT on weakness, wait for push above 2 emas to some resistance area and then go short on confirmation or rejects.
I open these charts and I get mad on myself. How I am letting it happen again and again.
Hopefully this post will help me. Really you need to go over your BAD trades and understand how to avoid them in future.
I know solution and now it must be only discipline!!!!