What Is FOMO in CFD Stock Trading?

There are many aspects to becoming a good trader, including knowledge, experience, discipline, and persistence. However, one aspect often overlooked is learning to distinguish between logical and emotional decision-making.

This is where FOMO, or the fear of missing out, comes into play.

FOMO in CFD Stock Trading Explained

In the trading world, FOMO refers to the feeling of anxiety a trader gets when they think they are missing out on a trade. This could be related to anything happening in the market, such as a new company being listed, social media coverage, or buying hype.

FOMO often happens because of greed and the desire to make quick and easy money. People don't realize that it's driven by unreasonably high expectations, impatience, and a lack of long-term perspective.

Real-World Example

One classic example of FOMO was the BBBY stock in late summer of 2022, which turned out to be a classic "rug pull." Certain public figures artificially inflated the price, urging retail investors to buy the stock. Due to massive social media coverage, the numbers were pumped from $5 per share to nearly $30 per share within two weeks.

Unfortunately, the big holders of the stock proceeded to sell their positions with massive profits, leaving retail investors with destroyed accounts, bringing the price to just $6.