The fear of missing out usually occurs when a stock is a making a big move and you missed it. This can lead to chasing an entry which is never a good trading decision because you will end up with a poor entry price and as you are caught up in the though of missing out you forget to manage your trade and risk.
The fear of missing out is driven by a desire to be a part of a good thing, even when all signs suggest that it is not a wise investment.
FOMO is so pernicious because we see other people succeeding, even if they are taking unjustifiable risks to do so, and we have a natural urge to join in.
The more wildly successful other people are, which is usually directly correlated with the amount of risk they are taking on, the stronger the urge to join in.
FOMO is usually harder for new traders to grasp because they haven’t been burned as many times as someone who has been trading the markets for a while.
The best way to deal with FOMO is to have rules in place and if you break them then you need to have some kind of punishment like no trading for the rest of the day.
You can’t make trading decisions based on emotions no matter how much money you see other traders making on a crazy run. There will always be other opportunities so stick to your rules!