One of the major fears of trading is missing out on a potential big winner, but I’m here to tell you that there are times to ignore fear of missing out.
Believe me, I know how hard it is to watch a stock or the market go up without you. Even if you sold because you had already taken a nice profit, the feelings of loneliness, anger and disappointment are strong.
But when price action is out of control, run – don’t walk – to the sidelines and wait it out.
When to ignore fear of missing out
When price action is ugly, as it was most recently, sell your positions and head for the sidelines. The only thing you’ll miss out on is losing money.
Let’s look at this in context of recent market action. In late January, markets nosedived and recorded some of the lowest oscillator readings in history (meaning markets were extremely oversold). Were sellers exhausted after that? Not even close. Markets continued to dive lower.
If you bought that first low thinking the market had hit a bottom, you were badly burned. Price action was terrible, and many traders stayed on the sidelines.
Then on January 28, a monster rally late materialized out of nowhere in the day with strong follow through the next day. Watching the markets rise 4% in less than two trading days was painful. It was the ultimate fear of missing out situation. Unless you have a crystal ball, this will happen. You will miss out, but you will also survive to trade another day.
Ignore fear of missing out when the technicals, particularly price action, are poor. It’s impossible to time the markets, so play it safe and protect your portfolio. It’s better to sleep soundly at night knowing your money is safe than rolling the dice when markets are volatile. There is always another trade just around the corner. Wait for it, it’ll come!