FOMO and FEAR

Introduction

A market is never a place for random price movement and even when it looks so for beginner traders, we need to get the fact that market decisions based on demand and supply by a lot of people create a price that then becomes a trend. You can not trade against the market trend and win the game, you are either going to hit your stop-loss or you liquidate. The trend is your friend, if you betray your friend, then you get the result from the market. Although the market is governed by greed and fear, the market is a combination of emotions that forms the market cycle. These emotions include; Disbelief, Hope, Optimism, Belief, Thrill, Euphoria, Complacency, Anxiety, Denial, Panic, Capitulation, Anger, and Depression.

FOMO (Fear Of Missing Out)

Have you had unrest, urge, or unease over a particular trade, with the belief that you are partaking in the spoils that others are enjoying, if you have, then you have FOMO. FOMO is a term used to refer to the fear of traders or investors in the financial market about missing out on a potential profit in the market. FOMO increases as the market increases towards the trader or investor's expectation.

The truth is, traders, do not have a FOMO for a trade that increases steadily over a short period of time but rather this happens when there is a spike/rally in the price giving this feeling of opportunity comes but once and should not be missed. As expected, FOMO happens when there is a belief that the market will continue over a period in the future.

FOMO is a result of greed, Herd mentality, Impatience, Indecision, Lack of trading strategy, amongst many other things.

In the market cycle, FOMO would occur in the Thrill Stage and Euphoria stage. I have chosen this stage in the market cycle due to a few reasons. There are a few factors/reasons that fuel FOMO and these factors can be said to be present during the Thrill and Euphoria stage of the cycle. The few factors that trigger FOMO are News, Trading Tips and Signals, Long time winnings on the same market, a very swift rally in the market, and so on.

During the Thrill stage, News starts to fly around about investing in the market, and how it is the investment of the year, decade, or century. At this point, people start to sell their belongings to get into the market, so as to partake in the gains of the market. In the Euphoria stage, greed sets in, and people want to buy more so as to be among the new set of billionaires. At this point even if the market starts to drop, FOMO traders pick it up as a correction and want to utilize the opportunity to get more from the trade but most times the trade goes south.

Fear, Uncertainty, and Doubt (FUD)

FUD is the complete opposite of FOMO as while FOMO is the fear of losing out, this is a fear of being in the wrong trade and losing money after investing. FUD often is a result of fear of the future being sour and the fact that the market is uncertain. With this, traders start to pull out their money from the market so they do not sink with the drowning ship.

In the Market Cycle, FUD periods for traders will be during the Panic and Anger phase During these two stages, the market isn't going up anytime soon and early investors already removed their funds. In the capitulation stage, there are reasons to comfort oneself for losses with the aim that the market will increase as time goes on but during the Panic and Anger phase, it is clear to traders who entered late that other traders are selling already.

BTC/USDT Emotional Phase Market Cycle

The market chart can mean different things to different people seeing it but for me, using the 4 hour chart on the BTC/USDT market, I could see the Disbelief, Hope, Optimism, Belief, Thrill, Euphoria, (while in the current market stage, I could see a little of the other side of the cycle which are; complacency, anxiety and Denial)

• Disbelief: This is the period when there are minor increase in the price of BTC but people aren't really sure if they should jump on the train as there are doubt that the will retace itself and go down.

• Hope: During this period, the market is rallying high and it is all green. People are hoping that the market retraces so they can join and harness the opportunity in the cycle.

• Optimism: During this phase, the market increases and become very visible that it is going up. At this point, other people start to jump into the market so they can enjoy the roller coaster.

• Belief: This is the point where you completely believe in the market without any doubt of the market. This is the time people start to get fully invested in the market and aim for a higher price and a big profit.

• Thrill: At this point, it looks like the market is never going to head down at all and we now trust our trading strategy. The news is doing well by saying the market is never coming down, people start to get more greedy and very smart in their view that they start to sell properties to buy into the opportunity. A lot of people at this point do not want to lose out. At this point, early investors start to pull out their funds little by little but since the public are buying into it, the market keeps increasing.

• Euphoria: At this point, those who sold their homes and properties start to feel like geniuses, saying theur made right decisions and they start to tell others who in turn buy as well. At this point, Investors start to pull out of the market and sell to people who are entrying late. At this point, people entering and those entered late have the feeling that they will all become rich over time from this trade.

• Complacency: At this time, the whales are completely out or almost out of the market but those who bought in late would assume it is a retest and would want to buy more.

• Anxiety: At this point, the market start to discount itself and you start to see the market go down and people start to lose money but then, there is the news of buy during the dip.

• Denial: Traders start to give themselves reasons to remain in the trade with reasons such as the market just increased a little, the market can't go back to zero, because i trust the market and so on.

ETH/USDT Emotional Phase Market Cycle

I will not be discussing the uptrend phase of the emotional cycle in this part as I have already explained in the BTC/USDT pair. In this part, I will be explaining the Anxiety, Denial, Panic, Anger, Depression Phase of the market. In the ETH/USDT pair, the emotional stages of the market is visible making the market phase complete.