Baiynd discussed the psychology of trading, including the dangers of FOMO; how she handled Wednesday’s sell-off; and her approach to market volatility.
Listen To The Market
When asked what advice she has for traders who may have been spooked this week by heavy selling in the markets, Baiynd said the danger is in being stubborn and ignoring the signals the market is sending once key support levers are broken.
“What I said to myself was hey, there’s a line and I can see it, and if [buyers] don’t step in there then that’s a signal that says, 'no, Anne Marie, you’re wrong and you need to wait until you see them coming in,'” she said. “A lot of times, we’re so afraid of missing out ... we step in front of that trade.”
Baiynd said even the most experienced traders still struggle with discipline at times.
“It’s natural to want to get to the front of the line, but at some point you have to weigh it against, 'what’s my risk?'” she said.
A Gray Market
While discipline is key to successful trading, Baiynd said traders should be careful about being too firm with their entry and exit targets.
“We’re always looking for black and white in the market, and it’s all a shade of gray,” Baiynd said. “Everything’s a range, everything’s a region and you just have to play that probability game.”
Baiynd's approach to the current market is to fade the bounces in the S&P 500.
“I’m going to stick my neck out and say all the big bounces we have from here are going to fade and they’re going to fade for a while,” she said.
“I would reckon that this number at 2,914, way up above where we’ve been, is going to be that flat edge, and all the bounced that we see over the next bit are going to continue to fade.”
The SPDR S&P 500 ETF (NYSE: SPY) continued its bearish momentum Thursday morning, dropping another 0.8 percent in early trading. The index was down 1.94 percent at the time of publication.
You can hear our full interview with Anne-Marie Baiynd at 13:30 in the clip below.
PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunes, Google Play, Soundcloud, Stitcher and Tunein.
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