Fomo is real. “The Fear Of Missing Out” is human nature and it can be a big factor in our trading. Good thing there are ways to balance it with reliable information to help us build great trades and not fall victim to our emotions.
A couple weeks ago we wrote about a stock that was getting some buzz as the next “Meme Stock” it had some posts on Reddit that claimed it was in a short squeeze and was going to explode to the upside. (You can read it here) Hey, that does happen occasionally and it can be lucrative. The trick is that “getting a hot tip from a friend” is not a reliable and repeatable approach to trading.
We looked at this on Nov 21st, and that was pretty much right on the peak.
If we were one of the lucky ones that got the heads up early, we may have done great on this trade. Or, we could have been caught up in the hype and believed that this stock was going to launch like a rocket and held onto it for dear life, even as it has started to drop.
The big lesson here is to manage expectations and lock in profits. If you are averaging 5% all year long and you can grab a quick 20-30%, lock it in. Don’t hold on to it until it breaks to the downside and you give away what, by all measurements, is a great gain because you were afraid of missing out on an unrealistic target.
Now, this could still take off and shoot up, but if I had any profitable trades left in MMTLP I’d lock them in.
Keep learning and trade wisely,
Market Wealth Daily