Financial encyclopedia

Recently, the strong policy support of the mainland government has driven Hong Kong stocks to pick up. In the past two weeks, the market has continued to rise, and the volume of transactions has increased significantly. The "fear of missing out" (FOMO) sentiment in the market has gradually increased.

What is the FOMO in investment?

FOMO means that investors make impulsive and insufficiently analyzed investment decisions for fear of missing out on potential market gains. This sentiment is often aggravated when the market fluctuates or rises rapidly, which makes investors ignore risks and rush to enter the market.

Driving factors

Market volatility brings anxiety: no matter whether the market goes up or down, violent fluctuations may arouse investors' fear of missing.

The illusion of continuous profit: when the market continues to rise, investors tend to have wrong expectations and ignore potential risks.

Vicious circle of losses: continuous losses make investors repeatedly enter and leave the market, and eventually increase losses.

Influence of rumors and news: Gossip in the market makes investors feel that they have missed the opportunity, leading to over-impulsive decision-making.

Misleading of social media: Successful cases of social media can easily make investors have unrealistic self-confidence.

Strategies to overcome FOMO

Only by facing up to FOMO psychology can we remain calm and respond to the market.

Avoid emotional transactions and stick to rational analysis.

Don't blindly follow the success stories on social media, but do your own full research.

Write a transaction log to reflect on past decisions and identify and correct wrong behaviors.

Good risk management helps to reduce the losses caused by impulsive trading.