How I Deal With FOMO transcript

what's up everyone alright so in today's video I'm gonna be talking about FOMO and what I'm going to specifically talk about are my personal FOMO triggers what really triggers that emotional response where I get FOMO and I just I give into it I bet every single one of you watching right now knows exactly what I'm talking about a day where you're gonna look back the next morning and be like what was I thinking and you know it was FOMO you know you gave into it and so what were those triggers that just sent you you know over the edge and threw everything out the window I want you guys to comment below with your FOMO triggers subscribe the channel give me a thumbs up if this is a video that you really enjoy and let's get into it breaking down my triggers all right so let's start by talking about what condition the market is in right now as I'm recording this video there is a stock up over a hundred percent over my shoulder and I'm trying not to even look at it or think about it last week a week ago today I lost seven thousand dollars it was the worst red day I've had and maybe six weeks of trading it was really disappointing and so in that moment I felt like I had this big setback I didn't have a lot of progress on the month and I dropped down by seven thousand I actually I put myself at breakeven on the month and then I'm Friday I lost another three thousand in the morning and then in the afternoon I came back to try to dig myself out of the hole I lost another two grand so I'm Friday I finished down five thousand that was eleven thousand plus another two grand those thirteen thousand dollars in the red in two days of trading and that put me red on the month so no doubt that was part of a trigger for me to start to feel FOMO and frustration and anger and to put myself into a more emotional place as a trader we're really sort of went to the next level was on Monday we saw the stock go absolutely bananas from nine dollars all the way up to twenty six dollars a share and you know what I finished the day Monday up over $14,000 $14,000 an awesome Green Day I actually made back everything I'd lost in the previous two days on Monday on Tuesday I made eleven grand on Wednesday I made thirteen grand and yesterday I'm sorry today Thursday I'm up $10,000 so that's forty-seven thousand dollars of profit in four days but I want to talk about something that happened yesterday yesterday I booked my thirteen thousand dollars of profit so I was up thirteen thousand on the morning which was a great morning and then I went into a meeting and during the meeting I saw on a computer monitor I was in the conference room the walls are glass so I could see him one of my staff members computers this stock squeezing up for three to three fifty two for two for fifty to five and I was just like uh I was getting so angry watching it because I had just traded that stock before going into the meeting I lost thirteen hundred dollars when I got out of the meeting I came right back to my computer I sat down I started watching the stock waiting for an entry and I found an entry it wasn't a very good one and I promptly lost about eight thousand dollars in my retirement account so what happened I look back at that now and I'm like wow that was really dumb I was really stupid why did I give in to FOMO what was the trigger there for me that let me just break my rules and take this afternoon trait that I really shouldn't have taken I think for me what was happening there was I took a trade and I lost money on it and then I watched it rip without me and so it's kind of a slap in the face because I had the right idea but my timing was wrong and because I had something else to do I missed the opportunity to get back in for that second try and that's life sometimes that is simply gonna happen but for me it triggered this this real emotional response so much so that I allowed myself to override my rules about afternoon trading and I came back in took a trade and then took a huge totally unnecessary loss and that's the same thing that happened last Friday last Friday I was down three thousand dollars a bad day I came back in the afternoon only to see the stock that I have lost money on all right noticing a trend the stock that I lost money on SCS was now up quite and it ended up I lost money on it trading it between four and five dollars it hit a high of over nine dollars by the end of the day so that felt like a real slap in the face because I even trip not only did I lose three grand on it I then lost another two thousand on it only to watch it squeeze up to nine bucks without me cuz by that time I was below my max loss and I threw in the towel so I'm be I'm trying to develop a sense of awareness of my triggers and my hope is that by sharing these with you that you will start to become more aware of possible triggers for yourself so just between Friday last Friday and yesterday that's twelve notes that's ten thousand dollars in losses that I can attribute directly to FOMO and so what I'm gonna start doing is I'm gonna start tagging my trades each day while I'm trading with the tag foam if it's a trade that I take on FOMO I'm gonna tag it because I want to hold myself accountable for how much money I lose due to FOMO now I'm not gonna say that I've never made money because of FOMO because sometimes I'm sure I have anecdotally I'm sure there have been winners I don't know them exactly right now but I'm sure there have been but what I'd like to see is that the behavior has a net negative result that I lose more than I win enough to just prove to myself that it's not even worth taking the time to trade during these times a day or when I'm feeling this level of frustration so I would say my first trigger that I'm becoming aware of is that if I lose money on a stock and then watch it rip up without me I get very tempted to try to overcompensate by buying a pullback this also happens if I hesitate on a trade because I'm not sure it's gonna work I then watch it rip and then I overcompensate from missing the good entry by getting in too high so that's something that I need to become really mindful of and really present in the moment when I'm about to take a trade am i overcompensating because I missed the good entry if I miss the good entry I missed a good entry the nice thing about trading is that there is always another opportunity around the corner and so there's no reason to ever force a trade when there's always another trade around the corner I should really just let the next trade come to me and that's exactly what happened on Monday Tuesday and Wednesday great trades came to me thirty-seven thousand dollars of profit in three days and wouldn't have been nice if that wasn't bailing me out from mistakes that I had made last week and now today was bailing me out from a mistake I made yesterday and ultimately over the course of the year there are probably dozens of these instances where I gave in to FOMO I and I ended up taking a totally unnecessary loss so first trigger seeing a stock first trigger would be losing money on a stock and then watching it run without me that's a trigger the second trigger would be hesitating on a trade and then watching it rip without me now someone commented very astutely that hesitation is a lot better than impulsivity if you're really impulsive a vacuum lead to catastrophic losses but being giving in to FOMO and a lot of ways is giving in to impulsive trading so on the one hand I hesitate and then I see it rip and then I give in to the FOMO and get impulsive which is a terrible combination so being mindful that if I miss if I hesitate and I miss an entry that I now have to wait for the next good quality entry one of the other triggers that I have is when I go from being green on the day to read so if I'm having a good day I'm green I'm up let's say a thousand or two thousand dollars and then I drop down into the red that for me is a big trigger because I had profit and then it slipped away I let it go it's it's much better for me just to go red immediately than to have something and then lose it when I start the day and I just dropped down two thousand dollars that's that's disappointing but that's much easier to handle than being up two grand and then turning round of being down a thousand or down two grand so going from green on the day to red on the day would be my third trigger I think one of my fourth triggers would be when I see someone else do really really well and I feel like I've missed out I see someone like John in our chat room there's a great traitor I'll see him say he's up twenty seven hundred dollars and it's on a day that I'm up only two hundred and I'm like what what did he do that I didn't do you know how was he able to get so aggressive and you know where did things go differently for him and rather than try to learn his strategy or or study up my initial response is an emotional one it's a kind of a little bit of jealousy a little bit of envy a little bit of frustration that I didn't do something right and that can lead me to take an impulsive trait if I see something starting to pop up jump right in that trying to capture a quick profit get myself right up there tied up with John and then next thing I know if it was a bad quality setup and I didn't do my full due diligence because I was trading more on emotion then I dropped back down I had a student recently asked me if during the course of the year I adjust my share size or if I just keep the same exact chair size all year long because ultimately if I'm right 70 percent of the time shouldn't I just always use let's say 5,000 shares and I said that it's it's such a great question the answer is that I don't use the same share size year-round what I do is I try to throttle back my share size when the market feels cold and throttle up when the market is high kind of like a driver going around a racetrack grass straightaway and where you try to throw out a lot really make the most of it but you got to slow down for those curves or if you start getting some rain on the track you have to slow down otherwise you're gonna spin off the track you're not gonna win a race if you just set the cruise control for forty-five miles an hour right that would be like setting my share size for forty five hundred shares what it would effectively do is it would minimize my profit potential during a hot streak it would level it out but it would also extend the losses during the cold streak because when the market is really cold doesn't it make sense to ease off the throttle and pull back on share size I think it does and so as a result during hot markets share size goes up to ten fifteen twenty thousand shares during cold markets share size comes down to three thousand to six thousand nine thousand tops right so I have this range but here's the problem the problem is that I'm the one that's in charge of you know throttling up or throttling back and I have to ask myself am i increasing share size today in response to something that's happening in the market or as an emotional response to FOMO anger or frustration because if I'm increasing my share size because I'm trying to revenge trade after a big loss then that's not in touch with the market I'm not increasing my share size because the markets genuinely hot I might be lying to myself and saying yeah I think this stock has a lot of potential therefore I'm going to take 18,000 shares in the middle of August I can tell you that I've done it and it's usually not good the right idea August is not that the hottest time of the year yet of course I convinced myself to do it it can be very difficult to separate when you're receiving this data from the mark and you're trying to make a decision am i filtering this data through an emotional filter or am i accepting exactly as it is because if I'm accepting it exactly as it is and I see a stock has squeezed up and now has a big red doji at the high a day with high a day read volume then that day that would tell me that the stock is showing signs of weakness but an emotional part of me might say well geez this stock already went from 5 to 8 so even though it has this red dough Gina's pullback it's worth another try and that's how I lost $7000 last Thursday I was applying hot market share size to a stock that really didn't fit that criteria it wasn't appropriate and you know why I was doing it I was doing it because on that particular day I had a really short fuse on that particular day I came into work I was running late I was bumbling out the door when I sat down in front of my computer my software wasn't working for broadcasting on Facebook and YouTube I had to restart then I got a blue screen my computer CPU is that like 99% even the mouse was like dragging it's a brand new computer so I was getting more and more frustrated next thing I know I look at the clock and it's nine twenty nine and 40 seconds I have 20 seconds to the Bell I've barely put together a watch list and so I was in a kind of emotional little bit of you know frenzied state a heightened state and when I'm in a place like that my fuse is shorter and I'm much more prone to make mistakes trading the market even though I only trade for an hour a day it's like you know it's like a professional athlete coming onto the field and when you come onto the field you want to be at peak performance you want to do the very best you can and if you're carrying this baggage from an argument you had from a speeding ticket you've got from a you know whatever it is that can absolutely carry over into the way you play a gamer into the way you trade leaving that stuff at the door is a challenge it's not easy to do but it's something you really want to learn to try to do and just develop a practice of doing it when you come into the market and certainly that begins with putting together your list of FOMO triggers what are the triggers for FOMO because if you can identify those triggers then as soon as they happen you can set your own internal circuit breaker where you say hmm I just hit my trigger I need to walk away because if I keep trading on a day like today I've got a 99% chance that the day is gonna get worse so I better stop now when you get to that point what's gonna happen is you're max last days are gonna get smaller and fewer between and that means you're more apt to be a successful trader so I want you guys to comment below with your triggers what triggers you I thought a couple I'm sure I have others but I hope those were helpful I might throw out a couple more in the comments and again if you guys enjoyed this video give me the thumbs up make sure you're subscribed to the channel and I will see you guys back in the channel hey have you seen my most popular video on YouTube it's got over 5 million views you can check it out right here and check out one of my other videos on YouTube right here I hope you guys enjoy as always if you have questions leave them down below in the comment section I personally respond to every comment that's posted