Fast Market Moves And FOMO - Don't Get Trapped

2020년 8월 8일

When the market moves strongly in a direction, you might feel the need to jump in and chase the trade because of the Fear Of Missing Out (FOMO).

Don't do that.

In fact, if you spend some time looking at the charts, you will find that often with such sharp fast market moves, the potential for a trade in the same direction as the fast move is over by the time people start reacting out of fear of missing out. This is when trades get squeezed and people lose money fast.

When you listen to experienced traders talk about such fast moves, you will often hear comments like "Wow, XYZ has rocketed up, but it's too late to enter now, I'll rather wait for a good pull back and see if there is an opportunity to enter later". You might actually hear them say that the move has gone too far from the moving average (maybe the 9 EMA or even 20 EMA) and that it's more likely that it will cause a "rubber band" effect with the price action moving back closer to the average.

The market may continue to rocket up or down, but let it go, don't chase that move, wait for your turn to get a good entry spot.

This is true no matter what you trade, Forex, Crypto, Stocks or Commodities, they all exhibit this tendency to recover (often quickly) when the price has suddenly moved too far from the average price. New traders are often caught off-guard by this, and tend to jump into the trade exactly when others are exiting their positions, so don't give in to FOMO. The market will give you many trading opportunities during the day, be patient and don't trade out of fear or greed.