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Trading Psychology

5 Essential Strategies to Conquer FOMO and Elevate Your Trading Game

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Written by Timothy Sykes
Updated 12/13/2023 9 min read

Don’t look now but the market is back to all-time highs.

And for a lot of money managers who have been sitting on the sidelines parked in cash are feeling their heart-racing.

It’s a feeling I know all too well…the almost magnetic pull towards a trade, driven by the fear of missing out on what seems like a quick money grab.

FOMO is common regardless of your skill level and experience.

It’s that voice whispering… Act now or regret it forever…pushing you towards impulsive decisions that can jeopardize your trading account.

For some, it’s an account killer, a dream crusher.

It clouds judgment, undermines strategy, and worst of all, it can turn what should be a calculated game of chess into a reckless roll of the dice.

But it doesn’t have to be that way.

Today, I’m going to unveil 5 transformative strategies to help you master your trading impulses and make smarter, more informed decisions.

These aren’t just tips—they’re game-changers

#1: Understanding and Acknowledging FOMO Triggers

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FOMO often stems from a deep-rooted fear of regret and a desire to always be in the winning circle.

It’s exacerbated by social media and community forums where traders frequently share their success stories, creating a skewed perception of constant opportunity and success.

Most of them are not transparent, hiding their losses, and throwing off the impression that trading is easy and that there is something wrong with you if you’re not making thousands of dollars each day from the jump.

The Fix:

Start a trading journal. Document not just your trades, but also your emotional state and the market conditions.

For instance, note if you felt compelled to trade because others were boasting about their gains in a particular stock.

Over time, this journal will help you identify patterns in your FOMO triggers.

Even after 20 plus years of trading, I still journal all my trades, and review them. I even make video lessons and share them with my students.

#2: Setting Clear, Personalized Trading Goals

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FOMO thrives in the absence of a clear trading strategy. When traders don’t have set goals, they’re more likely to chase after every opportunity in fear of missing out.

The other day I traded CCCC perfectly. I had a clear goal of getting on a panic dip buy and out quickly. And it played out perfectly. 

However, the stock surged after I exited the trade. Sometimes I’ll let that upset me…knowing I was in the right play and had a great entry.

Which pushes me to trade the symbol again, this time with bigger size, thinking I will get the same result.

And I tried to play CCCC again, this time with more size than I should have, which left me with little wiggle room. I got out of the position with a small loss, but the strategy was off.

Ironically, XGPT, my AI powered alert system nailed CCCC. It had a buy signal at $2.75…and yesterday the stock traded over $6.

A new XGPT alert is sent out at 3:15 PM ET, every day.

To find out more on how you can receive it— CLICK HERE. 

The Fix:

Define your trading objectives based on your risk tolerance, and timeline. For example, if your goal is quick and fast profits, focus on catalyst driven stocks. 

This clarity will help you stay focused and avoid distractions.

#3: Developing a Robust Risk Management Strategy

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The allure of a ‘big win’ can often overshadow the practical aspects of trading, like risk management.

FOMO can push traders into positions that are too risky or poorly timed.

The Fix:

Implement strict risk management rules. For instance, decide in advance what you’re willing to risk and where you plan to exit in case you’re wrong.

This rule can serve as a safety net, preventing impulsive decisions driven by FOMO.

In fact, cutting losses quickly is my number one trading rule. And it’s the reason why I’ve been able to outlast so many of my peers in this game.

#4: Embracing a Long-term Perspective

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FOMO is often rooted in short-term thinking. The fear of missing out on an immediate opportunity can overshadow the benefits of long-term planning.

My two best students, both with over eight-figures in trading profits, showed no signs of greatness their first year if you judged them on their PnL.

In fact, they probably would have quit if they rated themselves on how much they made that first year.

However, like all my millionaire students, they had a long-term perspective. They judged themselves on learning…and trying to get better each day.

The Fix:

Focus on improving each day. Learn one aspect of the trade that will make you better. Don’t judge yourself on how much money you make or lose in the beginning. If you do the right things for a long enough period…the results should follow.

But don’t rush the process…everyone’s journey is different.

#5: Engage in Community Support

students kyle mari and jack
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FOMO can also arise from a lack of confidence in one’s own trading decisions, often due to insufficient knowledge.

The Fix: 

Stay connected with a supportive trading community.

For instance, participate in webinars, read up on the latest catalysts, trends, and discuss strategies with fellow traders.

This not only improves your understanding of the markets but also provides a reality check when you’re tempted by FOMO-driven trades.

There’s a reason why my community has over 30 millionaire students…and that’s because we support each other.

 

Conquer FOMO and Trade with Precision: Discover the Power of XGPT! 🚀

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As a seasoned trader and mentor, I’ve navigated the highs and lows of the market, turning strategies into success stories. But even with experience, trading in today’s fast-paced market requires more than just intuition – it demands precision, speed, and insight.

That’s where XGPT comes in, revolutionizing the way we trade with AI-powered precision.

Explore How XGPT Elevates Your Trading Game:

📈 Master Complex Patterns: With XGPT’s advanced pattern recognition, spot profitable opportunities that others miss.

🤖 Decisions Free from Bias: Let AI analyze the data, helping you to make informed, emotion-free trades.

📊 Craft a Winning Trading Plan: Utilize AI insights to develop strategies that align with your goals and risk appetite.

🚀 Leverage Real-Time Insights: Stay ahead with swift, up-to-the-minute market analysis.

📰 Deep Dive into Market Dynamics: Understand the underlying sentiment driving market trends.

XGPT has already proven its worth, uncovering gems like CCCC, signaling a buy before it soared – a clear edge in a volatile market.

Ready to Transform Your Trading Experience? 📈

Watch this exclusive interview and:

🚀 Learn practical, AI-driven strategies to tackle today’s market challenges.

🔍 Experience live, real-time market analysis, unveiling hidden opportunities.

📈 Break away from the herd – predict and capitalize on market trends.

Your journey to becoming a more informed, efficient, and successful trader starts here. Don’t miss out on the future of trading.

👉 CLICK HERE TO DISCOVER HOW XGPT CAN TRANSFORM YOUR TRADING👈

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Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (205) 851-0506 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”