Those who are just getting into cryptocurrency and Bitcoin trading often do so with different approaches. Some are more mathematically inclined, others find strategic thinking and planning ahead easy, while some simply have a natural ability to sniff out good investments from a mile away. However, one thing that’s bound to trip up many new crypto traders in spite of their individual strengths is the crypto lingo. There are a lot of terms and phrases floating around the crypto space that are like a foreign language.
We’ve already taken a look at the Bitcoin-centric term HODL, so today we’re going to pick apart the terms FUD and FOMO, and describe the context they’re used in.
What Is FOMO In Crypto?
FOMO stands for Fear Of Missing Out, or the desire to be continually connected with what other people are doing, and having a feeling of anxiety if you’re not a part of something.
It’s similar in the crypto world, except FOMO can lead to some bad trades and losses. For example, it’s often used as a warning, “beware of FOMO”, meaning don’t jump onto a coin’s bandwagon just because you see the green candles going crazy. Make sure that you still do your due diligence on every coin you plan to invest in and never invest what you can’t afford to lose.
In the current bear market there’s not a lot of FOMO going on, but last October 2021 and November 2021, many traders were FOMOing into the market because the bull market was running strong.
What Is FUD In Crypto?
FUD stands for Fear, Uncertainty, and Doubt. It’s most commonly used when a person or circumstance creates a little bit of noise that makes people unsure as to what’s about to happen. For example, “JPMorgan’s Dimon spread FUD by saying Bitcoin is a fraud that will eventually blow up,” Elon Musk saying cryptocurrencies are bad for the environment, Jim Cramer saying cryptocurrencies have no value, and crypto twitter being flooded with negative news. All these factors contribute to market-wide FUD that generally leads to panic selling.
The main difference between FUD and FOMO is that FOMO can be avoided. You as a crypto trader may get FOMO, but by doing your own research, carefully examining the market, and exercising discipline, you can make better decisions that are not influenced by emotions.
FUD on the other hand is something created by someone or something else, so it’s a little harder to deal with. Again, your best bet is to stay calm, do your research, and if you’re really unsure, always HODL or stay on the sidelines until market conditions settle.
(Learn how to manage your emotions when trading crypto)
How To Deal With FUD & FOMO?
One way to guard against bad trades or rash decisions is to set your stop losses at levels that you are comfortable with. You can read the academy article to learn more about setting stop losses.
Secondly, not trying to time the market is a good strategy for dealing with FOMO and FUD. As is currently playing out, the market has dropped significantly in 2022, so being more careful with leverage is something traders should keep in mind. And if the market bounces back quickly, it’s important not to FOMO back in only to get FUD’d out when it drops back down.
You don’t have to be up to date on all the latest jargon to get into crypto and become a successful Bitcoin trader. Still, knowing these terms is quite helpful if you often look to other traders for advice or want to follow what other people are talking about in the crypto world.