Frequency Illusion

The frequency illusion, also known as the Baader-Meinhof phenomenon, is the experience of noticing something more frequently after it has first come to one's attention. In financial markets, if a trader hears about a new derivative product or a specific token, they may start seeing it everywhere, leading them to believe it is more significant or popular than it actually is.

This can create a false sense of urgency or FOMO, leading to impulsive trading decisions. To avoid this, it is important to verify the actual market depth, volume, and adoption metrics rather than relying on subjective perception.

Maintaining a focus on hard data helps in distinguishing between genuine market trends and the illusion of importance created by one's own focus.