This morning I was talking to a coaching client and we jointly realized that to characterize one of the most powerful trading emotions as FOMO actually misses the most important point. FOMO – or fear of missing out – connotates the fear of missing an event which really isn’t the mental set-up causing one to jump into impulsive trades or stay in losers too long.

Instead, the emotional force in play is literally the fear of feeling really bad in the future.

FOMO

I got out of that loser JUST before it did what I thought it should!

In this case, the academics term – fear of future regret – does indeed more accurately portray the situation. Traders always remember the times they didn’t take the trade or got out of a loser just before it reversed. They remember the loss but more importantly, they remember how downright lousy it felt.

When I work with clients, we often find that “it” is not about the money. It’s usually about the meaning – and the prospect of feeling that bad again keeps all kinds of traders in trades that are unlikely to work. To keep things simple for people, I have often summarized this as FOMO – until today when as often happens, a client helped me learn there really is a powerful difference between understanding a trading discipline danger zone as the feeling of not wanting to feel bad in the future or fear of future regret.