A Day Trader's Guide To Negotiating FOMO

Back in the saddle and feeling fine. I have to say that this has been a good few weeks for grinding out quality trades against a market that is in flux. I won’t say I don’t miss the simple days of January when every stock was just itching to find a chance to break out, but it’s nice just having a solid week of trades to find myself up nearly $30,000 on the month.

The reason this feels like a good market environment for me is because I feel in control, and a large part of that feeling of control is resisting the fear of missing out. Whether you’ve contended with FOMO itself or you just chalk the urge to chase a trade up to good old fear, greed and impulsiveness, the end result is usually the same. At best you might squeeze out a profit at the tail end of a runner just before a pullback, at worst you buy at the top and end up eating all or part of that pullback.

If you’re a trader, there’s little chance of avoiding these feelings entirely. Beyond careful research and planning, the pursuit of quick profit and the avoidance of loss is the core of active trading. However, there are strategies you can adopt that can help you make more measured decisions in the moment you see a chart start to spike.

Find A Comfortable Setup

One of the principles that has saved my bottom line the most over the past few weeks is simply exercising a little self-awareness in my trading habits. I commented on this in my trading blog this past Monday regarding a position in NF Energy Saving Corp (NASDAQ: NFEC), but there is no better confidence builder than putting in the patience and research required to find a set up that you know you can trade should the break out opportunity arise.

What I mean by that is identifying and tracking stocks with familiar makeup that trade with volume and at a price at which you feel comfortable entering. At its most basic level, this will help lower the risk of running into a lack of liquidity that could put you behind the market from the start. Doing this consistently can give you a better sense of what key elements makes a good or bad trade.

Plan Ahead Of Your Day

I’ve explained before how valuable watchlists and indicators are for traders looking for new ideas or just preparing for the open, so i won’t delve too deep into the practice. Suffice to say that screeners are an excellent way of casting a wide enough net to find stocks at your price point that have promising moving average or winnowing your watchlist to stocks with the potential for a big news release. Drilling down on a general type of trade that you like and doing your homework to find them will not only hone your skills in that situation, it will also open up your window for finding other, more varied opportunities.

Don’t Force A Trade

This is less of a strategy and more of necessary corollary to the previous suggestions, but do not try to force your way into a position. It is a mistake every trader learns at least once, though most learn it throughout their entire career.

The bottom line on forcing a trade is that stumbling into a stock that is mid-way through a tear or placing a clumsy market order on something with a low float is that it immediately puts you behind the traders who are moving the stock. Even in situations where you come out in the black on a late-breaking trade, you are still following the traders who are really going to make a killing. More often than not, you’ll get in too late, and those market leaders are going to make a pretty penny off of your impulsiveness.