The words FOMO and FUD are Anglo-Saxon terms that go beyond the world of cryptocurrencies. They are particularly known in the investment and trading sectors for representing certain emotions and states of mind. We will see through this article what FOMO and FUD actually want. But above all, we will determine if these emotions are a help or, on the contrary, an unnecessary burden for the Bitcoin and other cryptocurrencies trader.
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FOMO: Fear Of Missing Out
The afraid of missing something ((FoMO, Acronym of English fear of missing out) is a form of social anxiety characterized by the constant fear of missing important news or some other event giving an opportunity to interact socially. This fear is particularly fueled by certain aspects of modern technology, such as mobile phones (nomophobia) and social networking using sites such as Facebook and Twitter, where the user can continually compare his profile with that of other users. .
Fear of missing out – Wikipedia
Thanks to our Wikipedia friend, you now have a better vision of what FOMO means.
This emotion is particularly common in the world of cryptocurrencies and Blockchain.
If you remember the time your friend told you about this great sh .. altcoin who should be the new Bitcoin of who knows which country? That day, you didn’t pay attention to these words … if only …
Because 2 weeks later, everyone only talks about this altcoin! Twitter, Youtube, in the media… and the price takes off! + 200% in 6 days. And there, you feel it, at the bottom of your guts, the FOMO which tells you to buy!
Has the price already done + 200%? No problem, it will do + 4000%. Your instinct is infallible … Really?
In this situation, it is the fear of missing a golden opportunity that speaks: the FOMO. It will make you lose your reason, your prudence, to make you euphoric, enthusiastic, even in the face of the worst dangers.
For those who discovered Bitcoin in 2017, during the December bubble, and who bought Bitcoin for $ 18,000, yes, you will understand, it was FOMO.
FUD: Fear, Uncertainty and Doubt
Fear, uncertainty and doubt (FUD, literally ” fear, uncertainty and doubt “, Pronounced” feude “) is a rhetorical technique used in particular in sales, marketing, public relations and political discourse. It involves trying to influence others by disseminating negative, often vague, and fear-inspiring information. Originally used to describe an IBM disinformation tactic, the FUD is used more widely in the 21st century.
Fear, uncertainty and doubt – Wikipedia
The Wikipedia definition describes, again, pretty well what the FUD is. This emotion that will cause fear and doubt in you, in most cases comes from negative communication.
The latter can take many forms. In most cases, you will see news like: “The G7 will ban Bitcoin ?! “ or “The Black Spiral of Mining takes Bitcoin to $ 0!” .
These news, often putaclic and calibrated to generate traffic, rather than trying to inform you, most often come out in a bearish or complicated environment for crypto markets. They try to meet the need for rational explanations that the public is looking for, but ultimately only generate more panics with shock, most often false information.
But the damage is done. Once this news read, you will doubt, and you will be much more inclined to sell and take your legs around your neck: a good big FUD of families.
Emotions in trading
Emotions are part of the everyday life of any trader. And yet, it’s not for want of trying to do without it!
Indeed, in trading, 70% of your success will not depend on your technical analysis, but rather the rigor with which you follow your strategy.
Always – and even in traditional markets – professional traders have always warned against the emotions caused by trading.
The latter can intervene:
- At the time to buy
- At time sale
- At time build your graph
- During’trade execution
These emotions will then be like snakes: perverse, infiltrating your thoughts, bringing together to make you doubt your principles. But the interactions between emotions and their impacts on a trading strategy deserve a dedicated article.
The FOMO and the FUD are part of these emotions felt during trading. But they have the distinction of being felt by investors too even though the latter are supposed to be less concerned with the management of emotions.
And the reason is very simple: FOMO and FUD are emotions “Collective” and extreme. They are therefore felt in very specific contexts, which explains their universal nature.
In both cases, the same primary emotion is involved: fear. You have already felt this fear, I am sure.
Is it a good time to buy Bitcoin? But what if it continues to fall?
I missed Bitcoin in 2014 when I could have become a millionaire… if I never buy it and it spends the $ 10,000 tonight, I will not have any more opportunities and I will still have missed the train…
These two situations, although opposite in the action itself (buy or sell), are similar on one point: the fear felt by the individual.
FOMO & FUD: advantage or disadvantage?
These intense and complex emotions are difficult to control. And the culprit in this specific case is in your skull: your brain!
We all inherited from our ancestors a survival instinct. The latter includes a whole lot of so-called reflexes reptilians.
For example, it is the latter that cause you to remove your hand instantly after touching a hot surface.
FOMO and FUD are similar. In both cases, the primary emotion felt is fear. The purpose of fear is to keep us alive by warning us of danger.
In the context of FOMO, the danger is to miss an opportunity that could change our lives, in good.
For the FUD, the danger is to lose all of our savings in an asset that is going to be worthless.
As reptilian reflexes, it is not easy to control these emotions. Or even impossible. Nevertheless, you can still work on it in order to be aware of it, and to be able to act in your free will in these situations.
Under these conditions, the FOMO and the FUD can prove to be your best allies … like your worst enemies!
Your worst enemies
If you are not used to or aware of these emotions, FOMO and FUD can quickly be enemies, especially for your finances.
Indeed, these emotions will try to guide your decisions. And of course, in trading, humans are calibrated the opposite of what they should be.
“The best way to make money is to buy when blood is shed on the streets”
John D. Rockefeller
This quote sounds logical and relevant, but it is not that simple to follow.
According to the latter, you’d better buy Bitcoin right after a 20% / 30% / 40% drop. However, then your gut will cry out that it’s dangerous, that maybe the end, and you’ll run away from Bitcoin rather than buy it.
And that’s normal: survival instinct and FUD.
Likewise, when a cryptocurrency grows in value over a period of time, it is better to flee it. And yet it shines, it is beautiful, and it makes you want. Simple FOMO.
In these moments, the FOMO and the FUD will be your worst enemies. Unless you learn to master them.
Your best allies
Do we mean when I say ” control I don’t mean not to feel them anymore. Wanting to control primary instincts is most complex.
And in addition, they can be useful to you. So don’t fight them, rather learn to deal with it!
If you feel fear, doubt (FUD), maybe it’s time to take a stand?
On the contrary, if everything seems simple, beautiful and attractive, wouldn’t it be time to sell?
Learn to feel your emotions in the best possible way so that you can understand them, analyze them, and make the rational decision that best fits it.
As they say, the heart has its reasons that reason does not know.
How can you learn not to get carried away by your emotions? There are many tools to help you get there:
- Holding a trading journal
- Force yourself to do regular self tests
- Ask yourself the question of your emotions before taking a position
In any case, there is no quick fix. It will take personal work, time, and motivation.
But it is only through this process that you can transform the FUD and the FOMO into real assets, see allies!
From FOMO to FUD, traders are often subject to mental roller coasters. These extreme emotions, associated with fear, are very often exacerbated by social networks and the ease of communication that knowing our current world.
The problem behind these emotions is that they lead to errors, especially in the world of trading.
The only solution available to you: learn about these concepts, learn and do personal work.
But all this work will not be in vain. Indeed, the FOMO and the FUD can become your best allies in your trading activities if you learn to master them!
Now that FOMO and FUD have no secrets for you. All that remains is to know how to listen to them correctly.
Bitcoin, cryptocurrency and Blockchain influencer and popularizer. My goal: to make these complex concepts accessible with passion on a daily basis on my networks.