FOMO stands for “fear of missing out.”

Ever made a move because you felt like the opportunity may be nearing an end? Perhaps you are in the camp of people that have the Fear of Missing out.

FOMO is an emotional reaction that pushes us to trade or invest in a less disciplined way.

Rather than buy stocks when they offer the most attractive risk-to-return ratio, investors are driven to buy them when they are less attractive.

You should be focusing on what you are doing, not what you are missing. We will never feel we have made the best choices because the market is always going to act in unpredictable ways.

The best way to deal with FOMO is to be aware that it is going to occur no matter what you do and if you are going to give in to FOMO then at least make sure you manage your risk by investing wisely.

It is hard to give up on gains when it looks like others are getting theirs, but the truth is that we can ALL win. If you don’t keep that in mind, you’ll succumb to FOMO — Fear Of Missing Out and end up buying high and selling low which can lead to a financial disaster.

Fact: FOMO was officially added to the Oxford English Dictionary in 2013.

*The risk-return-ratio is a measure of return in terms of risk for a specific time period.