We’ve seen some absolutely CRAZY moves in many stocks recently. The shippers (DCIX), some China names, baby bios and anything with Bitcoin, Crypto and/or Blockchain in the stocks’ names or profiles (RIOT, XNET). And let’s not forget HMNY. Personally, I think October and November have been by far been the best months of the entire year for Day Trading. Let’s hope this action continues into December and beyond:
But what if you didn’t have a great October and November like everyone else on social media is claiming? What if you spun your wheels for another month or two or even lost a bit of money? What if you just sat and watched most of these big moves happen without you?
You’re probably VERY frustrated. You’re seeing everyone else around you celebrate and listening to endless stories on how traders are killin’ it. You’re even seeing a handful of gurus post MASSIVE intraday gains, sometimes several days in a row. You may be saying to yourself WHY can’t I make that kind of money? Or WHY can’t I make 1/10th of that consistently or on any given day? To say you’re just frustrated is probably a massive understatement.
Ideally this frustration would make traders work harder and motivate them to figure out their own trading. However, it usually has the opposite impact on most individuals. It makes a trader worse, FAR WORSE. It causes you to start throwing darts. It makes you trade with larger share size you aren’t comfortable with and shouldn’t be trading. You dive into stock $XYZ because some twitter Guru with 20K followers just said it’s the next Crypto play to go through the roof by the end of the day!!!!!!!!!!!!!!!!!!! (That chart he posted along with all those exclamation marks MUST mean he’s right? I mean come on, look at VWAP and that MACD thingy.)
Rather than following your process and rules, you throw those out the window and spend all your time looking for the next home run. Rather than sifting through charts and your scans looking for the next A+ chart pattern to setup, you scroll through Twitter trying to anticipate the next pump. You desperately want to be involved in the next big mover, regardless of the Setup.
This can even lead to hold and hope. The trade you took with too much size just pulled the rug out and now you can’t bear to take that loss. Besides, all these stocks are bouncing after the first pullback anyway, right?
Basically, all of this can lead to every behavior that’s BAD for your trading. Really bad.
Instead of you “banking it” like everyone else, you’re having the exact opposite experience. Besides the impact all of this is having our your P&L, it's your mindset and emotions that are taking the biggest hits.
What does all this boil down to? Why does this happen to many traders when the markets get like this?
FOMO (Fear Of Missing Out)
Yep, FOMO. I’ve blogged about this topic several times before but not quite in this light. This type of FOMO is way more involved than simply chasing some stock you see running without you. This type can crush you both emotionally and financially. This type doesn’t just change your behavior on a single trade, it changes it on a much deeper level for a much longer period of time.
So, what do you do?
STOP COMPARING YOURSELF TO OTHER TRADERS!
And especially stop comparing yourself to other traders who have MASSIVE followings and can easily manipulate stocks. You and I simply can’t do what they do. Quite frankly, why in the hell would we want to?
The only person you should be comparing yourself to is YOU. Tomorrow, you can’t go out and make $25K when you normally average $150 per day. To even think that is ridiculously unrealistic and is more than likely going to cause you to lose even more money. That’s exactly the type of thinking that leads to the $WTF behavior.
Instead, you need to focus on you. Compare yourself to you. Tomorrow, set a goal to be better than you were today. Make $150 today? Great job! Try and make $160 tomorrow. Stop looking for the big wins. Small steps.
So, stop comparing yourself to everyone else in chat, your GURU, your FURU, someone you follow on social media and/or anyone else. Want to make $25K tomorrow? Go buy yourself 20K followers and start marketing like crazy. Want to make a living Day Trading and be consistently profitable over the long haul? Do your best tomorrow to be slightly better than you were today. Stop looking at and worrying about what everyone else is or isn’t doing.
Focus on you and your process.
See that person in the mirror? That’s who you need to worry about.
Let me say this one more time: If watching a daily YouTube video of some “trader” making big bucks isn’t teaching you anything and instead instilling FOMO into your brain, STOP WATCHING THE DAMN VIDEO. It's not required viewing. Or if that twitter follow is causing you to jump into some random stock because he's claiming it's going to be THE one, click the unfollow button. Instead, spend your time studying and learning material that may actually teach and help you.