Last Updated on: 11th January 2021, 01:34 pm
FOMO is the acronym for “Fear Of Missing Out”. It is the fear of missing out on the profit you might make if you don’t buy a cryptocurrency ASAP regardless of its current price.
The cryptocurrency market is driven more by emotions rather than rationality, so FOMO is a huge factor to consider when trading cryptos.
The concept was first described in 2000 by Dr. Dan Herman in an academic paper entitled “The Journal of Brand Management.”
However, the acronym FOMO was coined a couple of years later by Patrick McGinnis in an opinion piece published in 2004 on the American magazine “The Harbus.”
The concept refers to the feeling of anxiety or the idea that other people are sharing in a positive or unique experience while you are missing out.
It is a phenomenon that is quite prevalent in social media, with the feeds from others often highlighting and emphasizing the positive and rewarding parts of their lives, leading the reader to feel sad or inadequate with their own experiences.
The FOMO feeling is particularly prevalent when an asset rises in value significantly over a relatively short time.
This has the potential for an individual (and the market community as a whole) to make market decisions based upon emotion (the fear of missing out) instead of logic and reasoning.
It is especially dangerous for the undisciplined retail investor, as it can often lead to a situation where trades are made for an asset that is overpriced, incurring much greater risks of financial losses.
Vincent Nyagaka is a Professional Trader, Analyst & Author. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Check out Vincent’s Professional Trading Course here.