JOMO, short for the joy of missing out, refers to the satisfaction experienced by cryptocurrency traders when they choose not to follow the crowd. It serves as a counterbalance to the fear of missing out (FOMO) and helps traders avoid losses caused by hype and frenzy.
In the world of crypto trading, JOMO arises from the decision to go against the herd, which is often wrong, and avoid potential significant losses. For instance, during the 2020-2021 bull run, many people were influenced by the frequent bullish calls in the Bitcoin market and bought at the peak, expecting further gains. Analysts at Standard Chartered and JPMorgan Chase even predicted that Bitcoin’s price would reach $100,000 by the end of 2021. The widely-followed stock-to-flow model further supported the bullish argument due to its historical accuracy in Bitcoin’s past cycles.
However, Bitcoin fell short of the popular $100,000 target and reached a peak of $69,000 in November 2021, experiencing a 60% decline. Traders who practiced JOMO by either selling or not buying into the rally came out on top. They had the advantage of retaining their capital and being able to enter the market at lower levels when FOMO was absent, such as in June 2022, which marked Bitcoin’s latest price bottom.
One trader, Michael Gogol, stood out as a JOMO trader who did not succumb to the overly optimistic Bitcoin predictions in late 2021. He reduced his exposure to crypto a month before Bitcoin’s peak and expressed his relief in May 2022. On the other hand, another trader admitted that he bought Bitcoin at $60,000 in October 2021 after being convinced by the market’s anti-inflation narrative.
FOMO typically stems from the desire to make quick profits. Many traders believe they can double or triple their investments in a matter of days, weeks, or months by investing in cryptocurrencies. Traders driven by FOMO often engage in frequent trading without careful consideration or a well-thought-out strategy. These high-risk trades can have negative mental effects on traders, leading to stress and sleep deprivation.
To transform FOMO into JOMO, traders can follow these four steps:
1. Develop a trading plan.
2. Keep a trading journal to track trading patterns.
3. Analyze potential trades using various metrics, including fundamental and technical analysis.
4. Ignore emotions, stick to the plan, and make adjustments as necessary.
It is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their own research before making any decisions.