Surely, newcomers to the cryptocurrency market have also heard at least once about the two terms FOMO and FUD. But it is still unclear what these two terms mean in this crypto market.
In this article, I will explain in the simplest way for newcomers to the cryptocurrency market to understand these two terms well. From the concept of what is FOMO & what is FUD, their harm and how to avoid being FOMO, how to secure your assets in cryptocurrency trading.
What is FOMO?
FOMO is an acronym for Fear Of Missing Out, which represents the fear of missing out on profits that can be earned if you don’t buy a certain cryptocurrency as soon as possible, regardless of the price. How much is its current?
In the market Cryptoemotional factors are used to make transactions happen more than rationality, so FOMO is a factor that has a great influence on the cryptocurrency trading decision-making process.
FOMO: Fear Of Missing Out
Eg: Let’s say you have no intention of entering any coins and are surfing telegrams in crypto investment communities. Suddenly, I noticed that many groups were talking about the cooperation between a large company and project A and it was likely to increase sharply.
At this point, you go to check the price of token A and you see that token A increases continuously and increases very quickly. Right now, you will feel that if you do not buy token A, you will miss the opportunity to make a profit.
After that, you make the decision to buy token A regardless of how much its price has increased before. Thus, it can be said that you have suffered from FOMO.
What is FUD?
FUD is an acronym for Fear, Uncertainty, Doubt, which refers to fear, doubt and uncertainty about bad information being spread from unknown sources of a certain cryptocurrency (usually Bitcoin).
Traders tend to sell off FUD coins regardless of its current price, causing Panic Sell (ie massive sell-off) causes the value of that coin to drop much in a short time.
FUD: Fear, Uncertainty, Doubt
Eg: You have entered an order to buy token A and are waiting for an increase in price to sell. A few days later, suddenly you see the news that coin A will be delisted (removed from) the exchange, along with evidence that a fake photo will make you confused.
Immediately, you check in many other telegram communities and still see this news being discussed a lot. At this time, you will easily fall into a state of fear if token A is delisted, the possibility of you losing money is very high.
At that time, the brothers’ mentality only focused on preserving their assets and sold off token A with the least loss possible. And many people think the same thing, when the buying demand is not too high, the price will drop much compared to the level before the FUD.
Who will cause FOMO & FUD?
Actually, FOMO and FUD are very powerful tools influential organizations and individuals in the cryptocurrency market apply to serve their own interests.
Often the organizations that create FOMO or FUD will have control or great influence over many major media channels, from which they can influence as many traders as possible.
- FOMO is used as a price pusher of the cryptocurrency goes up with the aim create liquidity to take profits.
- FUD is again tools used to lower prices cryptocurrency with GOING IN purpose as many of those cryptocurrencies as possible before triggering FOMO to take profits.
Consequences caused by FOMO and FUD
Inexperienced traders in the market will be prone to these two effects, and the most noticeable consequences are Their wealth is decreasing after each FOMO or FUD.
But, the bigger consequence is that traders I no longer believe in my own judgments and decisions when I entered the order, because I had suffered a lot of losses due to FOMO and FUD before. And once a trader no longer believes his judgment, the possibility is high That trader’s assets will go to 0.
Scam by creating FOMO, FUD . effect
This is a worse case of the above consequences, when the user is intentionally spread FUD or FOMO by higher-ranking people, in order to make the victim in a mentally unstable stage to take actions. wrong actions such as selling or buying indiscriminately.
After that, the creators of FOMO and FUD will do the opposite, which is to buy or sell their coins sharply, causing newcomers to “swing to the top” unjustly. This is often the case with unknown projects, or the project team has a precedent for doing this on previous projects.
Symptoms of FOMO, FUD . syndrome
Before going into the main issue, let’s see if you are in the category or are affected by FOMO and FUD on your trading decision.
Usually, brothers who often suffer from FOMO and FUD syndromes will be inexperienced traders in the market, and will have signs such as:
- Impatient while trading.
- No plan trade before entering the order.
- Trade according to the news but not updated market fast enough.
- Analytical techniques are not yet hard enough, leading to easily swayed identify.
04 ways to overcome FOMO and FUD psychology when investing
If you have any of the above signs, you can refer to some ways to avoid FOMO and FUD below:
- Update trading knowledge for sure will help you be more consistent with your analysis and evaluation.
- Always have a trading plan before entering an order. There must be a stop loss stop loss, entry point, target sell point, how much capital allocation plan, etc. before trading.
- Must really be patient, stick to the plan your transaction. Do not rush, impatient to enter the order.
- Limit transactions according to news and events. At the same time, practice market observation closely to have market sensitivity.
From personal experience, it seems that FOMO and FUD will never disappear in everyone, no matter how old the experience. Because we not only invest, but also have a life outside.
For example, in the case, you encounter an unfortunate incident in real life while preparing to enter an order, it will cause our psychology to be disturbed immediately. At this point, if you are not really alert, entering orders is simply like a game of chance.
So the above tips can only significantly reduce the damage caused by FOMO or FUD, but cannot completely stop it.
Looking at the negative side FOMO and FUD create great consequences for the brothers, along with a decrease in the number of assets through each time of FOMO, FUD. But, if you look at the positive side, FOMO and FUD can still help you make a profit if and only if you are calm enough and brave enough to take advantage of the opportunity.
Because Crypto is essentially a zero game, when one person loses money there will be one person who makes a profit in this market. And most importantly, who will you be? Lose money or make money?
Hopefully, through this article, you have better understand what FOMO & FUD syndrome is, as well as the harmful effects and ways to avoid these psychological syndromes. If you have any other questions, please comment below to discuss with Techtipsnreview!
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Source: What is FOMO? What is FUD? 04 Tips to avoid psychological syndromes when investing in Crypto