FOJI (Fear of Joining In)
FOJI (Fear Of Joining In) is the opposite of FOMO (Fear Of Missing Out). At FOMO, traders dare entering the market even though prices have rallied so strongly. On the contrary, at FOJI, traders are afraid to enter the market, even though there is already a confirmation signal from the trading system. FOJI can be detrimental to traders, because traders will be late to enter the market.
HOW DOES THE FOJI HAPPEN?
There are several things that cause FOJI, including:
Previously suffered losses.
If a trader has previously suffered a loss, it usually has a traumatic impact. In Trading Psychology, there is something called Recency bias, here traders tend to remember the events that have just happened. For example, if we are driving and have just seen an accident, we usually tend to drive more slowly. Even though it was an accident that happened to other people. If the accident happens to us, the psychological impact is more powerful. Sometimes people who have just crashed may not want to drive again. Traders who have just experienced a loss usually tend to be cautious, even very careful, until they don't dare to enter the market, so they are vulnerable to experiencing FOJI.
Feeling the trend has not changed.
As an example in the stock market, a buy signal usually only appears after the price has experienced a long bearish condition. In this case, traders feel that market conditions are still bearish, even though a buy signal has appeared. This also the result of Recency bias. As a result, when the market is really bullish, traders are already left very behind.
The worst situation is when traders doesn't want to enter the market due to FOJI, then after the prices rally, traders desperately enter the market because of FOMO
HOW TO OVERCOME FOJI?
Then how to deal with FOJI in trading?
- First, you must have a Trading System. This will be your guide in making decisions in trading, whether you can enter the market or not
- Psychologically, if you ever lose, there is always a traumatic feeling, especially if you experienced a big loss. Stop trading first for a while, after feeling calm, you can trade again
- Trust in the trading system. By trusting, you will be able to discipline it, so you don't get confused when deciding when to enter or exit the market.
Hope this article inspires