Ways to Control Emotions in Trading to Avoid (FOMO)

Main conclusion:

• Emotions are inevitable, so recognizing and managing them is critical to preventing them from controlling your actions.

• The best way to control your emotions when trading is to plan your trades and trade according to your plan.

• Moktering is a great tool for beginners to improve their skills without risk.

Emotions can overwhelm a trader's mind if they don't know how to deal with them. Especially with the high volatility of the cryptocurrency market, which often creates fear of leaks (FOMO) and panic selling.

One of the most important keys to avoiding emotions that overwhelm your trades is to develop a trading plan and build a solid risk management strategy. It should also be understood that the market tends to reflect or be influenced by the psychological state of its participants.

When market sentiment is positive and prices continue to rise, it is said to be in an uptrend or bull market. But when prices fall in a downtrend or bear market, pessimism usually takes over the market sentiment. Therefore, mastering your expectations through careful planning is very important to become a successful trader.

Market Cycle Psychology

Traditional markets are always volatile, but the cryptocurrency market is known for its high volatility. The significant price movements that this new asset class experiences on a daily basis are unprecedented. Usually, it takes years to double the price of a stock or commodity, but it only takes a few minutes to reach 100% of the market value of a crypto asset.

Such volatile price movements can make it difficult to trade properly, especially when emotions are brewing. Therefore, it is important to have a clear understanding of the 14 psychological phases of the market cycle so that you are clear on how your emotions can drive your trading.

• Distrust – After a long downtrend or bear market, traders tend to ignore the first bullish rally because they believe the uptrend will fail.

• Expectations – After a significant recovery at low prices, traders are starting to believe that an uptrend is a possibility.

• Optimism – Traders become more confident in the strength of an uptrend when prices start to rise.

• Belief – Traders believe the uptrend will continue and enter the market expecting prices to continue rising.

• Thrill – As profits grow, market sentiment improves and traders become more vocal about their positions.

• Euphoria – After the parabolic price spike, FOMO started to encourage traders who believed the uptrend was holding, there was more money to be made and nothing could go wrong.

• Satisfaction – Traders often mistake the first payout after a parabolic price increase as a short adjustment to accumulate liquidity ahead of new all-time highs.

• Concerns – As prices continue to fall without any significant recovery, traders are concerned about the state of the uptrend.

• Reversals – Traders become long-term HODLers because they believe the price will eventually reverse and be able to recoup their profits.

• Panic – As prices continue to fall freely, traders panic and sell their assets to cut losses and save capital to buy the bottom.

• Capitulation – Nothing seems to be able to lower the price any further, causing additional panic among traders and even old HODLers.

• Anger – Traders don't believe they can win when the market goes up and are angry with themselves for their losses.

• Depression – all hope is lost and traders feel foolish for not exiting the market on time and believing that prices will continue to rise.

• Distrust – After a long downtrend or bear market, traders tend to ignore the first bullish rally because they believe the uptrend will fail.

• Avoid FOMO and panic selling

• While avoiding FOMO and panic can be difficult, you can manage these emotions so they don't dictate how you trade.

• Keeping a trading journal to record everything you do as a trader including strategy development, risk management, sentiment .

Conclusion:

By carefully documenting your successes and failures, you can avoid making the same mistakes over and over again.