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Trading Education Posted by Team Topstep December 2, 2021

FOMO - What Is It and How Do I Handle It?

Dont Panic

Here is a scenario that every trader can relate to; it is a typical trading day, except your system is not triggering any entries. Eventually, you grow impatient, and your mind begins to entertain the idea that a move is coming. If you don’t become more aggressive, you will miss out on a profitable experience. 

Or, on the other hand, on a highly volatile day, you know the profit potential is substantial, so your mind begins to play tricks on you. It’s as if a voice is whispering in your ear that if you don’t step up and make a trade, you will miss out on a move of a lifetime.

These are experiences that we’ve all had to endure at some point in our trading careers. In fact, for many of us, no matter how much experience we have, we are prone to hearing these voices echo time after time. 

This article will address the “fear of missing out,” or FOMO in short.  FOMO affects many facets of life, but traders have an unusual interaction with this problem.

So, What Is FOMO?

First, it’s wise to examine the concept of fear, which in itself is not a bad thing. Fear is a force that enables our self-preservation. For example, some of us have a natural fear of heights, and for a good reason, as we know, heights can be dangerous. However, unnatural elements of fear, sometimes identified as phobic responses, tend to be less about survival and more about unhealthy reactions to routine experiences. 

Fear is not something to be avoided because it’s a natural part of life. Rather than hiding from it, we should pay attention to it. After all, if we avoid our emotions, the likelihood is that these feelings will creep up and demonstrate themselves in the most inconvenient ways. 

I often quote from Sun Tzu’s ‘The Art of War;’ however, I enjoy adapting his statements to trading. Sun Tzu says, “If you know yourself and know your enemy, you need not fear the outcome of a hundred battles.” The same applies to trading. If we know ourselves and know our markets, we need not fear the outcome of our trades. 

The easy part is often knowing our markets, but it presents much more of a challenge to know ourselves. 

Good vs. Bad Fear

There are healthy and unhealthy fears when it comes to trading. Healthy fear keeps us mindful that if we lose patience, make mental mistakes, and abandon our plan, the results can be catastrophic. However, unhealthy fear frequently comes in the form of a voice whispering in our ears that we will miss out if we don’t jump into the market. 

This is why it is important to know yourself and listen to your fears, as you can begin to detect which source that fear is coming from – the healthy or the unhealthy thought process. 

Fear can become an advantage in trading. Yes, I am afraid to neglect my rules, but this keeps me in line with my plan and enables me to sit on my hands when needed. A fear rooted in negativity will tell you that you’ll miss opportunities – FOMO. 

I likely don’t have to tell you that when you let the voice of fear drive you to take trades rather than your market analysis, that tendency is going to steer you into poor trades. Once you enter a trade based on fear, you’ve given that fear the steering wheel, and it will only intensify throughout the trading process. 

So, how do you overcome the dreaded FOMO? The remainder of this article will target strategies that you may find helpful in combating the negative energy of fear. 

5 Ways To Combat FOMO

Internal Dialogue

When faced with the voice of fear, we naturally want to drown it out. But this can lead to serious problems. So the better solution is to explore your feelings. First, you might ask yourself why you are afraid, then assess your fears. 

Once you’ve identified the thoughts that motivate your fears, you can counter them by affirming the beliefs that you want to control your thinking. In doing this, you can generate new automatic thoughts, which will create new thinking patterns. At its core, this is cognitive psychology, which in basic principle is changing your thinking to enable you to process your feelings in a healthy way. 

Plan Plan Plan

The second principle is not so technical but remains equally pertinent. Planning is the key. You give yourself a highly programmatic approach when you plan your trading life. We live in a world where robots are not subject to fear influencing their decisions because of how automation works. The more you plan, the less you will be moved by fear. 

Employ Your Strategy Across Multiple Markets

Everyone’s situation is different. If you can, use your methods on multiple markets. The benefit is that you increase your potential to trigger more high-quality trades, thus reducing the fear of missing out. There are potential drawbacks. You must know yourself to detect other internal responses from watching multiple assets. 

Realistic Expectations

This is simple but also crucial. So many traders fail because they become pessimistic about their performance due to faulty expectations. Yes, the markets present the opportunity to “get rich quick.” However, for everyone who does get rich, dozens lose their accounts trying. Longevity is the key factor in a trading career, and it’s true that slow and steady goals help build the case for a tenured career. If you miss out on a few trades or even a few days of trading volatility, it only affects you in the very short term. 


FOMO often comes from traders focusing on screens that are not signaling reliable trades. One of the simplest remedies, for me at least, to this type of disappointment, is to automate my charts to alert me of appropriate conditions and then multitask by working on other projects or even exercising to keep my body and mind fresh and alert. 

I realize that multitasking could be a distraction for some, and therefore may not work for everyone, but for others, this could be the key ingredient to countering FOMO. One further option when your screens are not showing you good trades is that you can walk away. Believe me, it’s much better to walk away than it is to push a trade and end the day in the red. 


These ideas hardly reinvent the wheel but serve as good reinforcement to counter one of the common problems that all traders have faced. It’s a good idea to journal your trading days and have a playbook for each market atmosphere. Essentially, risk management is critical. Always ask yourself if you can be happy if you take this trade and lose, knowing you gave it the best shot. 

Wrestling with these questions on the front end is better than grappling with the regret on the backside of your trades. Remember, fear can be a helpful ally or a deterrent, and it’s up to us to employ this emotion to serve our trading most appropriately. So, until next time, trade well!