In trading there exists a trade off between risk and reward.Limiting profitability allows for placement of trades with a higher probability of profitability.
This can lead to a higher amount of success, which is especially important in a smaller account. A few methods to increase POP include:
- Reduce potential reward
- Cost Basis reduction strategies
- Take on more risk with wider strikes.
Check out today's Best Practice where Tom and Tony cover this especially important topic of risk.