FOMO-FUD: psychological traps of trading

FOMO-FUD: psychological traps of trading

What is FOMO and FUD: our fears and the influence of the environment. Why do we think others live better than us. Psychological manipulation and fear of missing an opportunity 

FOMO – fear of missing something important, FUD – a manipulation method, the purpose of which is to sow doubt in a person’s head about his actions based on logical conclusions. Both terms are similar, but if FOMO is a person’s internal psychological problem, then FUD is a targeted external manipulation. Read more about these terms, as well as what are the reasons for FOMO and FUD and how to eliminate them, read on.

FOMO and FUD: why are we sure that others live better than us?

Early warm autumn. Evening. You sit comfortably on the couch with a cup of cocoa or tea, take cover with a light blanket in the hope of watching your favorite series or reading something interesting. In between episodes, you check social networks. Curiosity is characteristic of some people in social communications, and boasting is characteristic of others. And now, seeing how your friends, while you are sitting at home under a rug, relaxing on the seashore, in clubs or traveling to other countries, you wonder: are you doing the right thing now?

And now the series or the book fade into the background, and thoughts about missed opportunities flash in my head. “Where was the wrong turn made?” “Why did my friends achieve more than me?” Little by little, self-digging turns into easy envy. And even if the answers to these questions cannot be found, the mood is already hopelessly spoiled.

What is FOMO and FUD: causes and effect

For the psychological state described above, a separate term has been coined – FOMO (fear of missing out), fear of missing out on something important. This concept was added to the dictionary of psychological terms only in 2013, and it is defined as “Anxiety because something interesting happens somewhere, but there is no way to take part in it”. 

FUD (Fear, Uncertainty, and Doubt) is a tactic of psychological manipulation that is used to sow the majority of uncertainty about the future. And the question is not in the falsity of the information, but in its presentation in such a way that it is perceived by the audience as the manipulator needs.

The reason for the appearance of FOMO syndrome was the expansion of the information space. If before the advent of the Internet, people received information from radio/television/ or from communication, then the Internet made it possible to monitor everything that happened at the same time, without leaving home. With the advent of social networks, blogs, people got the opportunity to throw out their emotions and desires on the Internet, without fear of the consequences. And while some on social networks are bragging about their capabilities, others, watching them, begin to doubt these very capabilities.

Causes of FOMO Syndrome:

  • Curiosity. Everyone is interested in how others live and what others do. And it doesn’t matter if a person knows these people or not. Sometimes the success of friends with whom he had previously been on the same level (he studied at school, university), “clings” even more.
  • Banal fatigue and unwillingness to give up the habit. The desire to constantly sit in news feeds, on forums and social networks over time turns into an obsessive fanatical target and a drug. It doesn’t matter how much time is wasted, it doesn’t matter that the information will be mostly forgotten tomorrow, the essence is important. And somehow invisible is the fact that this waste of time does not bring happiness and pleasure.
  • The problem of choice. With the expansion of the information space, the number of possible solutions to the issue has increased. Endless decision making exhausts and paralyzes. A person ceases to see the obvious advantages and disadvantages of a particular solution, ultimately chooses a less attractive option, and then, comparing his result with the results of others, reproaches himself for the “imperfect” choice.
  • The desire to do everything. When a person has several options and he does not know what choice to make, he tries to “embrace the immense.” When this does not work out, he looks at others, as a result of which a deceptive opinion is formed: “If others succeed, then I can.” The spirit of competition (competition) is a positive moment, but in people with FOMO syndrome, it becomes a cause of dissatisfaction with oneself.
  • The desire to be better, or rather, the fear of being worse than others.

Two surveys conducted in 2013, in which about 3,000 people took part, showed that the fear of missing something important arose among those who were less satisfied with their lives. Personal failures and primarily limited communication encouraged people to spend more time on social networks in monitoring others. In part, such behavior could be the result of loneliness – as a hungry man always wants to eat, so a lonely person wants to communicate.

The consequences of FOMO syndrome:

  • Becoming “the way of the crowd”. A new person comes into a new environment with new ideas. Gradually more and more doubting himself, a person begins to look closely at the actions of others. Professionals do not have anything bad to learn from, but only in the case of a reasonable approach. Attempts to blindly follow the crowd lead to defeat because most market makers like to manipulate.
  • Psychological problems: depression, irritation, fatigue from life, self-doubt. “Others live better, they have achieved everything, they are happy and enjoy life. But I’m a failure, I can’t do anything, I can’t do anything. ” Standard formulations of a person with FOMO syndrome.

FOMO syndrome is often called banal envy, but this is not entirely correct. Envy is a feeling of annoyance caused by the success and well-being of another person. FOMO is the opposite of comparing one’s success with the success of others and blaming one’s own failures. The main symptom of FOMO can be called an obsessive desire to monitor the actions or successes of others and the appearance of irritability (wounded pride), dissatisfaction with their choice.

FOMO and FUD in trading

There is FOMO in trading. This is facilitated by the accessibility of the information space, where at almost every step both the beginner and the experienced trader is faced with those who are more successful. It is human nature to compare his actions with others. As a result, the illusion appears that others are doing everything right: they earn more, they lose less, they have found an ideal trading strategy, etc. A person begins to doubt his actions more and more, self-esteem is reduced, and with it, the desire to do something is also reduced: to analyze and develop. Instead of focusing directly on trading decisions, the trader (especially this is typical for novice traders) focuses on trying to understand himself and lamenting about “his difficult fate.”

FOMO and FUD in trading go hand in hand. In practice, this works as follows:

  • You see a growing trend. The course is growing, the hype is growing, fueled by the very news of FUD. Their goal is to cause doubt in your thinking about the correctness of their actions. Logic suggests that opening deals is not worth it. But the FOMO effect forces one to make a decision based on a sense of fear due to lost profit. You open a deal at the peak of growth.
  • The market is rolling back. And again, on the syndrome of lost profit, the trader does not close a deliberately unprofitable transaction: “What if this is only a correction?”
  • At the very bottom comes the realization that you are “divorced.” And blame it is only himself.

One of the tools (sources) of FOMO is social networks and forums. Almost every third Forex site speaks of opportunities to earn 100% per annum or more. It seems obvious that this is a marketing ploy. But when this information is found every day, and the trade does not go on and on, the thought creeps in my head: “Am I doing everything right?”

Having asked such a question, the trader turns to the forums, where he begins to communicate with more successful traders. And here the situation is compounded even more. The problem is that the trader does not come to the forum with the desire to learn something new, but with the desire to compare himself with others and prove his superiority. And at that moment when this does not give the desired result, the syndrome of lost profit becomes even stronger.

How to get rid of FOMO syndrome or reduce its effect on yourself:

  • Change your mind on some things. First of all, think about yourself: your goals, plans, and motivation. From the side, the life of others seems very different. And if someone seems happier from the outside, this does not mean that you own all the information. You see only what others want to show you, but do not know the other side of this happiness. People are more likely to share the joy than problems, and in this case, the point is in comparing yourself with anyone?
  • Learn to set goals and follow them, not regretting what was done. Do you want to earn today, and tomorrow goes to the sea – do it! But if the sea was not part of your plans, then at the time of setting goals it did not interest you. I saw friends at sea and you suddenly wanted to go there – do not regret the past, set goals for the future and fulfill your desires.
  • Reduce the time spent on the Internet and social networks, communicate more live. In a social network, you see only a part. In live communication, a person can share a lot of information with you. For example, experience in achieving goals. 
  • Learn to reasonably prove your point. At a minimum, this will help increase self-esteem, and a strong, self-confident person does not look back and moreover does not compare himself with anyone.
  • Look for reasons for a good mood. FOMO syndrome often manifests itself in moments of pessimism and depression. Therefore, try to please yourself with some pleasant little things. 
  • Do not use social networks. Refuse them on the condition that this does not harm the main work or trading. For friends, there is a telephone, for work – messengers. Calculate how much time you save!

Psychologists advise people with FOMO syndrome to use classical methods: forget about using social networks and forums, do meditation, talk more in real life, and change the situation radically for a while. It is important to concentrate on the positive aspects, trying to quickly forget about the negative. True, psychologists are silent about how to diagnose this syndrome, classified as a psychological disease. And how to implement most of their recommendations is also not clear.

Herbert Simon, Nobel Laureate in Economics, offered another piece of advice. In a simplified version, it sounds like this: we choose not the best option, but the one that currently suits us. We must come to terms with the fact that we cannot process the entire existing array of information and we are only exhausting ourselves in search of the best. Human resources are not infinite, therefore, you should not engage in a constant search for a solution, and then compare the result with others and reproach yourself with its “imperfection.”

And finally, the third tip is to use a pen and paper. Psychologists advise asking yourself a few questions and make an action plan in accordance with them. Having outlined on paper the reasons for dissatisfaction, forcing a person to compare himself with others, a plan of action that can change the situation will become clear.

Avoiding the FUD situation is simpler: just don’t follow the crowd, do not rush, do not make hasty conclusions, analyze the situation and factors influencing it, think logically and do not regret the actions performed.

Output. FOMO syndrome is most often found in those who are dissatisfied with their lives and are not sure of the correctness of their actions. Dependent on the opinions of others, people are afraid to miss something new, devoting a lot of time to the search for this “something new”. No need to try to cover everything, no need to repeat what others are doing. Each person is unique in his own way, so it’s worth watching someone else’s success only in order to learn something.

You are only you, your life is only your life. You are a person! Remember, only you yourself and no one else are responsible for your success. You set goals yourself, make choices and make decisions. So you do not need to look back. Do not regret the past minutes, because at that moment you were happy. Plan for the future and forget about jealousy and FOMO. It is you who is in control of your life, and not someone else. Do not compare yourself with others, live for your pleasure and life will become even brighter, filled with bright colors. Smiles to you, kindness, optimism and of course good luck! And if you are interested in the psychology of trading, then I recommend another review on collective trading, affiliations, and affirmations.

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