Welcome to Penny Stock Trading 101! We’ll start with one of the most commonly known mistakes a beginner can possibly make!
What is FOMO?
If you’ve already read my How to Actually Make Money with Penny Stocks then FOMO may sound familiar.
FOMO stands for “Fear of Missing Out” and it’s a very common psychological phenomenon that happens to beginner traders.
But guess what?
It can still affect veteran traders as well!
Let’s delve a little deeper why FOMO is an important lesson and why you should watch out for it.
But before we do, let’s take a step back.
Ask yourself why do you want to learn penny stock trading? If your answer is “to make money” then you’re in the right place!
And everyone else in this market is trying to do so as well.
So Why is FOMO Important to Know?
Everyone is here to learn how to make extra money.
Whether it’s for a side hustle, to improve their lifestyle, escape the 9-5 grind, pursue financial freedom, or all of the above.
So somehow in some shape or form some people have learned that penny stock trading is one of the fastest ways to make extra money.
And don’t get me wrong. When done properly, you can easily double your money or more.
But there’s a catch.
It takes discipline and lots of practice.
Because you are competing with other people in the market who are just as eager as you to make money in the market.
And something psychological like FOMO can throw a wrench in your plans.
The more you trade, the more you’ll realize that the biggest opponent you’ll face is actually yourself.
Plus your emotions and discipline.
How can FOMO Affect YOU?
Okay so now that we defined FOMO and how it ties to human emotions, let’s describe how it can affect your trading career.
Imagine that you just started trading penny stocks as a brand new trader.
You’ve heard the hype and you’re sick of the 9-5 grind. The corporate politics that are tied to it, the endless overtime hours and the lack of additional pay.
So you’ve decided that you want to trade penny stocks.
Let’s take a pause for a minute. Can you tell that at this moment, you’re already prone to making mistakes?
You’re excited and eager to trade without doing any research because you probably want a get-rick-quick scheme.
And in this mindset, FOMO can hit you the hardest.
You find out about a ticker symbol through a Facebook group, social media, a friend, etc.
And the next morning, the ticker spikes up like crazy. Because you are so eager to make money you don’t have a plan and you end up buying the stock near its highs.
Plus, the moment you do so, the stock drops DOWN.
You panic and lose money.
And you promise to never trade again because it’s a scam.
The moral of the story is be disciplined with trading so you can avoid the easiest ways to lose money.
Trading Recap: $FLRE – A Prime Example
I’ve been trading penny stocks for at least a year and I’m still susceptible to FOMO.
Today was a prime example of it.
I’m calling myself out so I can learn to avoid my mistakes and to continue growing as a trader.
Because I know that this is something I want to do for several years.
6 years ago I wanted to trade stocks and never made the jump. 6 years later, I ignored the doubt, the fear and jumped in.
And learned a TON while doing live penny stock trading. I made some, I lost some but I’m continuing to move forward.
So how did I hear about FLRE? It was from a discord group I recently joined and when I was considering it, the stock price was 0.007s.
I wanted to do some research on it before jumping in, but the price moved FAST.
Within a minute, it flashed to 0.009s, 0.01s and then with my impatience and fear that I would miss out on gains, I ended up buying at 0.012s.
Then the price dropped to 0.009s again. To my dismay.
So then I wanted to close the position before the end of the day.
And sold for a $50 loss at 0.01s.
When I sold it, the ticker went back up to 0.015 before closing at 0.011 at the end of the day.
I could have avoided this mistake if I planned my trade properly.
How to Avoid It
So how do you avoid FOMO?
By being disciplined and planning your trades.
Know your entry, exit and stop losses BEFORE you actually get in.
Put it on a post it, write it on your notepad, whatever works for you.
Because the name of the game is to earn money and not lose it.
If you’re wondering how a trading plan looks like, you can download a copy of mine below!
Once you made the plan, stick to your plan when the market opens.
Then you’ll be earning money instead of losing money.
How was your penny stock trading experience? Did you succumb to FOMO during your penny stock trading career?
Leave a comment below!