SPY on the Market: Fighting FOMO (Fear of Missing Out) | | by Hugh Grossman
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Grab your two Tuesday trades here. | | | It's ingrained in our psyche. We were raised to believe that the harder, longer hours we work, and the more time and effort we put into something, the more we benefit. The same holds true for investing: the more and longer time we remain invested, the more money we will make.
This may work for long-term investing, where we are rightfully told to stay invested and ride out any market volatility and price fluctuations. It may work well for passive income, and we should profit immensely in the long run.
Unfortunately, it does not work well with our type of trading. Options are contracts that enable us to trade the underlying stock for a certain price by a specific date. We do not actually own the stock; in fact, we do not want to own any stock... been there, done that. If I dig deep enough, I can find plenty of worthless stock certificates that excited me at some point in my life. Now, I just want the money.
Successful options traders know the difference and have mastered the concept of getting in and out of positions quickly. Day-trading options does not facilitate a buy and hold strategy. Instead, it favors having an active role in earning money on a daily basis. The mindset is recognizing and reconciling this emotion of fear of missing out (FOMO) and understanding that "cash" is the default position.
We only want to enter a trade when there is a valid reason, secured by an impending move on the stock. Options are not places to park cash, and that is a key difference between investing and trading. | | Forget about AI stocks A lot of investors are throwing their money at dozens of AI stocks - hoping to find the next NVIDIA…
But a small group of investors have seen recommendations with an 87% win rate by trading just one ticker.
Get the details here. | | | "Fear of missing out" is one of the hardest emotions to master. So how to combat FOMO? After all, our money is not earning a single penny sitting in cash, and that is not what we have been taught all our lives.
There is only one way I know to take solace that it is OK to not be in a trade. It is the diligent use of a trading plan. The benefits of this tool are many, some of which I have already discussed in previous newsletters. One key attribute is a plan's ability to hold you accountable. With each new day, a new profit target is presented. Once you reach your goal, close your trading account and do something else. You're done for the day.
Achieving your targets will eliminate the FOMO. It will keep you grounded as you head towards your ultimate monthly and yearly objectives.
For example, with our type of trading, if I invest capital of $10,000 to buy 20 contracts costing $5 per contract, and sell for a mere $0.15 gain, twice a day, that works out to $600 a day or about $150,000 a year. That is respectable by any measure. If I let FOMO rule, I am destined to keep trading, usually until that last trade of the day goes south, forcing me to either hold overnight or take a loss. My anxiety increases as my risk of loss. A trading plan provides the guardrails, reducing my FOMO, keeping me on track.
When I travel, I have a plan, usually including a map and time frame in which I should reach my destination. I often have contingencies built into my plan should something go awry. If I take a cross-country flight in my airplane, I create a flight plan. We plan our meals, our activities and most everything in our lives; hence it should be no surprise to plan our trades. By doing so, we have a good idea as to where we will be in a week, a month and a year from now. | | Search Less, Profit More: January A.I. Options Scanning Did you know there are over 10 million tradable assets worldwide?
Finding the right opportunities can feel like searching for one grain of gold in a vast desert.
Imagine having a tool that acts like a metal detector, cutting through the noise and pinpointing high-potential trades with precision.
With A.I., you spend less time searching and more time focusing on what really matters — making profitable decisions.
Join the January A.I. Options Scanning Session. | | | This is one reason so many of our Trading Room participants are successful.
They plan their trades and trade their plans. Some seek to make $50,000 a year, others $500,000. Either way, their ambitions are fulfilled with the proper approach. Eliminating the debilitating emotions of trading can help keep the trader focused and on track for his or her longer-term objectives. It may be a little cumbersome at first to track your trades, but you will soon recognize the advantages and it will become second nature to log your trades.
We talk about these and other topics in our morning Trading Room. Fight FOMO along with us. Click here for the details.
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Sincerely,
Hugh Grossman
Editors, Trading Room, Pick of the Day, Inner Circle, and Signal | | About Hugh:
 Hugh Grossman has manned the helm of DayTradeSPY for over a decade now. A self-taught trader, who turned master trader, has learned everything about trading the SPY (the SPDR S&P 500 ETF). Hugh has been guiding his subscribers of Inner Circle, Pick of the Day, DayTradeSPY Signal, and the Trading Room to daily profits since 2010. | | | | | |
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