The Concept of Credit as a Proxy for Risk

The podcast episode discusses the concept of credit received as a proxy for risk in trading. The speaker explains that credit targeting is an important aspect of their trading style, where the annual goal is broken down into a credit target based on the projected premium capture rate. By focusing on the credit received, traders can determine how much they stand to lose from each trade, especially when using stop losses as a risk control mechanism. The credit received can be used as a mental gauge to determine the size of the trade and how much risk one is willing to take.