Lesson 2 of 6 · Trading Psychology
FOMO
FOMO makes you buy the tail end of the move.
Fear of missing out is the pull to enter a trade that already moved because you do not want to miss the rest. You are entering at a worse price, with less room, and the traders who were already in are thinking about their exit.
This is what chasing looks like.
Price breaks above resistance and the FOMO buyer enters on the FALSE BREAK candle. The move reverses immediately. The entry was at the worst possible price: maximum risk, minimum remaining upside.
The stock just broke out. Up or down from here?
Reveal what happened
It went down. DOWN. The breakout was false. Momentum chasers who entered at the high are now trapped, and their stop-losses add fuel to the reversal. This is the FOMO trade outcome.
A stock just broke out and ran 8% while you watched. You had no plan. The right call is:
Show the answer
C. Wait for a pullback to a defined level, or skip it entirely. Chasing an 8% move without a plan puts you in at the worst risk/reward. Wait for a setup that meets your criteria.