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FOMO and FUD

Fomo and FUD

What you can expect to learn?

  • FOMO and FUD Test
  • What is FUD, FOMO and factors causing them
  • Strategies to tackle FOMO and FUD 

Before we begin the article, let’s do something fun. It will take less than a minute. Give a shot at this quick FUD/FOMO test and see how you score.

Fomo Fud Calculator

There are two arch enemies in life in general and trading in particular, and more so specifically in crypto trading life:  Fear of Missing Out (FOMO) and Fear, Uncertainty, Doubt (FUD).

What is FOMO?

When we think that the train is going to leave the station and try to jump on it at any cost, that is parallel to acting out of Fear of Missing Out (FOMO).  

We forget, temporarily, that there are more trains to catch and that the market is here in the long run.

When you fall for the hype and do not follow the facts, like this guy that Jordan Belfort is seen conning in Wolf of Wall Streets.

What is FUD?

When we let negativity and false information drive us out of the market or keep away from good opportunities, we are facing Fear Uncertainty and Doubt (FUD).

A real life example could be, letting some false information blind us completely from reality and lead us to make irrational decisions.

For instance, this gentleman who is reacting to a VR immersion to a totally false reality.

Difference between FOMO and FUD

Crypto trading, for that matter any trading, is a zero sum game.

What that means is, for you to win, someone has to lose.  For you to sell at a profit, someone has to be willing to buy at a higher price.

Is FOMO and FUD bad?

Not all situations of FOMO or FUD bad when they are backed by a process.

For instance, when Chainlink dropped to $1.8 we jumped on the opportunity to buy a few.  At this point, Chainlink was already 600% from its initial listing price a year back.

Because we had done our research and have established our target entry points, buying into an asset that is already 600% high was not a bad decision.

Similarly, when you get disillusioned through research and new information that the project you thought was going to the moon is actually a piece of scrap, it is ok to FUD out.

As long as we keep our rational hats, FOMO and FUD can help us make timely decisions.

What causes FUD and FOMO?

Following blindly

When you choose to simply follow someone’s advice without validating the facts just because someone said it, then you become a victim of FOMO or FUD, depending on what is fed to you.

For instance, take the News channels.  In this day and age, they are mere propaganda promoters.

Many people either are clutched by fear or act carelessly based on what is fed to them.

If these channels say that the market is heading for a crash, people following these sources will take hasty decisions.

When they report something rosy – market responds by going euphoric, irrespective of facts.

This is exactly what we are witnessing today with COVID crippling the economy while the stock market is rallying to new heights each day.

Greed

FOMODuring the 2017 crypto bull run, some people who made millions of dollars couldn’t exit the market because they thought they could time the market.

So they kept playing and lost their gains and in some cases capital to the crash.

Greed generally makes people make irrational decisions that ultimately lead to their own peril. 

Lack of research

Who wants to read a boring 30 page whitepaper when you could let a YouTube influencer give you his opinions?

This convenience has resulted in relying on influencers without understanding the underlying intentions.

Do you know if the influencer has any conflict of interest?

Are you getting an unbiased view of facts or are you just getting biased opinions?

Lack of research is one of the biggest reasons why people are forced into making irrational decisions.

Sensation for facts

In the world that floods us with millions of bytes of information, the one that grabs your attention wins. 

In this race for attention, we have become victims of ‘clickbait’ headlines.

I have read in some forums that people have executed a wrong trade by just reading a clickbait headline only to realize that the actual news was not as rosy or dire.

In the online world of stimulation, sensation sells.

Unfortunately, we cannot make investment decisions based on sensation.

Investment is mostly a boring activity.  It involves reading a lot of dry sources, following through on due diligence, carrying out research, executing decisions and being patient for the right time.

How to tackle FUD & FOMO?

Curiously, the tools to tackle FUD and FOMO are the same, that means, you tackle one and you tackle the other.

Using FOMO and FUD against one another

When you are faced with FOMO, go out and seek negative information on the project that has you in the FOMO grips.  

Create deliberate FUD for yourself.

If you are suffocated by the clutches of FUD, then remind yourself why you were interested in the project in the first place.  

Has anything changed about the project that got you interested in the first place?  

If yes, then you have to simply take the next logical action.  If nothing changed, you can motivate yourself by seeking FOMO angle.

This strategy will help you remain sane while the market goes nuts.

Breath

I am not going all spiritual on you but trust me when I say this helps.

When you are running after or away from something you take short breaths, this is a good indication that you are going to make some hasty decision.

When you are faced with a FUD or FOMO situation: BREATH. 

Consume the information without reacting.  To stay rational, practice conscious breathing and then put your head down to ‘dig for the facts’ before you take the decision.

Research

There are over 6000 projects in the market.  You cannot learn about every project fully.

However, you can learn about a few projects as fully as you can.  This research will help you gain insights that will help you to make the right decisions.

Fundamentals

Technology has changed but us humans have remained the same blob of biology. 

Human nature, gravity, north pole, south pole, have remained unchanged.  

Similarly, the fundamentals of a good project are the same whether you are looking at  a company in the crypto space or traditional space.

Look for these solid fundamentals. If your project has these fundamentals – then the temporary ups and downs should not bother you. 

This will help you sleep better at night.

Beware of confirmation bias

We usually seek out what we want to validate.

Read that again.

We as creatures of habit want to reduce the world to fit our view.  

This is particularly true about our investments.  It is important to consciously seek out contrarian views that of yours.

This will help you gain greater perspective and make all round decisions.

Follow the money

More often than not, mainstream media will be saying one thing and the big money is doing something else entirely.  

Even if the news of FOMO or FUD is true, it is usually an ‘after-the-fact’. 

No one will actually let you in on the secret before they place their bets.  

For instance, someone will talk about how this startup is going to change the world AFTER that company has already gone public.  

This means, the VCs are ready to dump their stocks onto unassuming noobs while they 1000x their seed investment.  

A classic example of this in the crypto space is when JP Morgan publicly condemned Bitcoin and threatened to fire anyone at the firm who buys bitcoin.

Secretly, JP Morgan was buying boat loads of Bitcoin and shortly they even introduced their own cryptocurrency.

In this short video Teeka Tiwari reveals all the hypocrisy of these big players who manipulate the market into FUD and FOMO depending on what benefits their deep pockets.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

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IMPORTANT DISCLAIMER

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We do not endorse or guarantee the accuracy of the information and claims made.

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