FOMO

This is the most powerful market force and it is deeply hard-wired into our “social brains”.

We have a hard-wired notion of doing things “right” as everyone else. This is at the core of social formations - do as everyone else, because “they know what they are doing”.

This is everywhere, back from the primitive (but efficient) hunter-gathering and early agricultural (the first settled) societies.

It actually goes even deeper, into the so-called “animal mind”, when most of higher species “know” (have a heuristic) to avoid poisonous water and foods and to be aware of what others in their pack or a flock are doing.

All the organized religions are based only on “doing it right” (without understanding or asking any questions) just “as everyone else do”, because “they know how to do it right”.

Even in business people copycatting each other. Fashion is a copycatting of a particular current style, etc, etc.

Trading is a social phenomena (formation) and a social activity. Individual and social (evolutionary) psychology are the main driving forces behind every individual action (including of bots, written by humans, which encoded human heuristics).

FOMO is what moves the markets and create “tides”, not just “currents” or “waves”. It could be seen and captured at any time-frame, it could be both an irrational buying exuberance (like everyone else) and fearful, cascading panic-selling, again, “the other people know what they are doing”.

The real professional trading is to identify correctly and to ride (just like a surfer does) these recurrent, re-emerging waves from the right direction and with the proper timing.

It is this very principle lies behind the famous meme “buy when there is a blood on the streets”, and other notions like “bought the top” and “sold the bottom” (which implies trading from the wrong side).

The deepest insight one could have about trading is that it is indeed psychological and socially constructed (like an organized religion) and that every “mathematical theory or approach” is just bullshit, plain and simple.

The main difficulty is to identify correctly the current marker conditions based on accurately reading the current sentiments of the majority, which becomes the current dominant force and moves the price in the direction of its eagerness or the current direction of FOMOing in.

Have one seen a flock of birds turning in different directions like a solid whole? This is how the markets move. The difference is that the “flock” is never the same – the ones who took an action are signals to those who are FOMOing right now.