FOMO (Fear Of Missing Out) drives traders to enter positions impulsively because they see prices rising or because social media is buzzing about an asset. Herding behaviour — following the crowd — amplifies FOMO by creating social proof. Together, these biases cause buying at tops and chasing momentum that's already exhausted.
FOMO triggers: seeing price rise rapidly, social media hype, hearing about others' profits. Herding: following the crowd feels safe but often leads to buying tops and selling bottoms. Narrative bias: constructing a bullish/bearish story to justify the FOMO trade. Regret minimisation: taking a trade to avoid future regret, not because it's a good trade.
When you feel FOMO, ask: 'Does this meet my setup criteria?' If no, do not trade. Have a predefined trading plan with specific entries — FOMO trades never fit the plan. If you missed a move, the market will provide another opportunity.
Track FOMO trades separately in your journal. Compare FOMO trade performance to planned trade performance. The data will show that FOMO trades underperform significantly. Use this evidence to build discipline.
Self-awareness throughout trading sessions, especially during volatile moves
FOMO is the single most expensive emotion in trading. The cure is a detailed trading plan with specific entry criteria, entries, stops, and targets. If the trade doesn't match the plan, it doesn't exist.
Hindsight bias is the tendency to believe, after an event has occurred, that you predicted or expected the outcome all along. In trading, this manifests as reviewing charts after the fact and feeling certain that the signals were obvious, leading to overconfidence in future predictions and an underestimation of real-time uncertainty. This bias distorts trade journaling and prevents genuine learning from both wins and losses.
Anchoring bias occurs when traders fixate on a specific reference point — such as their entry price, an all-time high, or a round number — and make subsequent decisions relative to that anchor rather than evaluating current market conditions objectively. This bias leads to irrational behaviour such as refusing to sell a losing position because the anchor (entry price) feels more 'real' than the current price.
Confirmation bias is the tendency to search for, interpret, and remember information that confirms your existing beliefs while ignoring contradictory evidence. In trading, this means once you form a bullish or bearish view, you unconsciously filter information to support your position — ignoring warning signs and overweighting supportive data.
Revenge trading is the emotionally driven behaviour of immediately re-entering the market after a loss with the goal of recovering the lost money as quickly as possible. This reactive pattern abandons the trading plan, increases position sizes, and lowers entry standards — compounding losses rather than recovering them. Revenge trading is one of the most destructive behavioural patterns and is responsible for turning manageable losses into account-threatening drawdowns.