Interview: Michael Toma on Risk Control

09/12/2012 7:00 am EST


Michael Toma

Author, The Risk of Trading: Mastering the Most Important Element of Financial Speculati

Develop the skills to manage risk in the high-stakes world of financial speculation! That’s the subject of this author interview with Michael Toma.

Michael Toma is the author of The Risk of Trading: Mastering the Most Important Element in Financial Speculation, a practical resource that takes an in-depth look at one of the most challenging factors of trading—risk management. In this book, Michael puts a magnifying glass on the issue of risk, something that every trader needs to understand in order to be successful.

Most traders look at risk in terms of a “stop-loss” that enables them to exit a losing trade quickly. In The Risk of Trading, Michael explains that risk is ever-present in every aspect of trading, and advocates that traders adopt a more comprehensive view of risk that encompasses the strategic trading plan, account size, drawdowns, maximum possible losses, psychological capital, and crisis management.

In the interview below, Michael talks about how to conduct a detailed statistical analysis of an individual’s trading methodology through backtesting and real-time results, so as to identify when the methodology may be breaking down in actual trading. He also reveals why traders should think of themselves as project managers who are strategically managing risk.

Michael’s book is based on his unique "focus on the risk" approach to trading using data-driven risk statistical analytics. In this interview, we talk to Michael about how traders can operate more as business managers and learn how to avoid market-busting losses while achieving consistently good results.

This interview originally appeared on

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