What is FOMO? What is FUD? What are the effects and manifestations of FOMO & FUD syndrome? Let’s see 04 tips to overcome these syndromes here!
Surely, newcomers to the cryptocurrency market have also heard at least once about the terms FOMO and FUD. But it is still unclear what these two terms mean in this crypto market.
In this article, I will explain most simply 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, FUD to secure your assets in cryptocurrency trading.
What is FOMO?
FOMO is an acronym for Fear Of Missing Out, or fear of missing out, expressing the fear of missing out on profits that can be earned if you don’t buy a particular cryptocurrency as soon as possible, regardless of the price. How much is its current?
In the Crypto market, emotions are used to drive transactions more than rationality, so FOMO is a significant influence on crypto trading decision-making.
Example: Suppose you have no intention of entering any coin and are surfing telegrams in crypto investment communities. Suddenly, I noticed many groups discussing cooperation between a large company and Project A, which was likely to increase sharply.
At this point, you check the price of token A, and you see that token A increases continuously and 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 decide to buy token A regardless of how much its price has increased. Thus, it can be said that you have suffered from FOMO.
What is FUD?
FUD is an acronym for three words Fear, Uncertainty, and Doubt which refers to fear, doubt and uncertainty about insufficient information spread from unknown sources of a particular cryptocurrency (usually Bitcoin).
Traders tend to sell off FUD coins regardless of their current price, causing a Panic Sell effect that causes the coin’s value to drop significantly quickly.
For example, you have entered an order to buy token A and are waiting for an increase in price to sell. A few days later, you suddenly see news that coin A will be delisted (removed from) the exchange, along with evidence that a fake photo will confuse you.
Immediately, you check in many other telegram communities and still see this news discussed frequently. At this time, you will quickly fall into fear if token A is delisted; the possibility of losing money is very high.
At that time, the brothers’ mentality only focused on preserving their assets and sold off token A with the most minor loss possible. And many people think that when the buying demand is not too high, the price will drop much compared to the level before the FUD.
Learn more about FOMO & FUD
Who will cause FOMO & FUD?
FOMO and FUD are very harmful tools applied by influential organizations and individuals in the cryptocurrency market to serve their interests.
Usually, the organizations that create FOMO or FUD will have control or great influence over many significant media channels, from which they can influence as many traders as possible.
- FOMO is used as a tool to push up the price of a cryptocurrency to create liquidity to take profits.
- FUD is a tool used to sink the price of a cryptocurrency to import as much of that cryptocurrency as possible before activating FOMO to make profits.
Consequences caused by FOMO and FUD
Inexperienced traders in the market are susceptible to these two effects, and the most obvious consequence is that their assets decrease after each FOMO or FUD.
But, the more considerable consequence is that traders no longer believe in their judgments and decisions when entering orders because they have previously suffered many losses due to FOMO and FUD. And once a trader no longer believes his judgment, there is a high probability that the trader’s assets will reach 0.
Scam by creating FOMO, FUD effect
This is the worse case of the above consequences when the user intentionally spreads FUD or FOMO by higher-ranking people to make the victim mentally unstable to act wrong actions such as selling or buying indiscriminately.
After that, the creators of FOMO and FUD will do the opposite: to buy or sell their coins strongly, 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 in your trading decision.
Usually, the brothers suffering from FOMO and FUD syndrome will be inexperienced traders in the market and have signs such as:
- Impatience while trading.
- There is no trading plan before entering the order.
- Trade on the news but don’t update the market fast enough.
- Analytical techniques are not yet rigid, leading to easily shaken judgments.
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:
- Updating actual trading knowledge will help you be more consistent with your analysis.
- Always have a trading plan before entering an order. Before trading, there must be a stop loss, entry point, target sell point, how much capital allocation plan, etc…
- You have to be patient and consistent with your trading plan. Do not rush, impatient to enter the order.
- Limit transactions according to news and events. At the same time, practice observing the market closely to have market sensitivity.
From personal experience, it seems that FOMO and FUD will never disappear in everyone, no matter how old the occasion is. Because we not only invest but also have a life outside.
For example, if you encounter an unfortunate incident in real life while preparing to enter an order, it will cause your psychology to be disturbed immediately. At this point, if you are not 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.
Summary
Looking at the negative side, FOMO and FUD create significant consequences for the brothers, along with a decrease in the number of assets through each time of being FOMO, FUD. But, if you look at the positive side, FOMO and FUD can still help you profit if you are calm and brave enough to take advantage of the opportunity.
Because Crypto is essentially a zero game, one person makes a profit in this market when one person loses money. And most importantly, who will you be? Lose money or make money?
Hopefully, through this article, you better understand what FOMO & FUD syndrome is and the harms and ways to avoid these psychological syndromes.
