Avoid FOMO and Catch the Market by Following a Simple Rule

As traders in this market, we are used to seeing long waves of up and down movements. We know the long-term trend of the market is up and we are often rewarded for buying dips and selling the rips. But the motion of the market is not as smooth as one would like it to be and there are times when the market zigs when we want it to zag and vice versa.  

The toughest part about participating in this market is trying to get back in if we have recently taken our exposure down. Even more challenging is watching the market move upward without us, creating an amount of regret that often puts us in a difficult position mentally and emotionally. We call this FOMO, or the fear of missing out. It is a natural response to a market moving forward without us, and usually becomes a tool for chasing stocks that are on the move.

But unless we decide to simply leave our funds in at all times or just average down on our positions when the market dips, trying to re-enter the market becomes a guessing game. Trying to time the market is a fool's game, especially if you are not nimble and quick on the trigger.

The stock market will offer great opportunities to enter and exit at certain times, but it is difficult to be exactly right. Our goal is not to time the market this way, rather use the drops and dips to add more exposure when opportunities are presented. If you suffer from the fear of missing out and continue to guess at entry/exit points, you'll find yourself on the losing end more often than not.  

If you can ignore those animal instincts that suggest you follow the crowd (like on last Friday, when the market reversed higher) and wait for some followthrough, you'll find yourself in a much better state of mind and catching the markets before it makes a much larger move.