Episode 9 – Why professional traders don’t measure their performance in dollars and cents w/ Michael Toma

Weekly Market Perspectives – 09/07-09/11
September 12, 2015
Check out my interview on the Desire To Trade Podcast @desiretotrade
September 17, 2015
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Between all the elements in trading that traders focus on and can focus on, risk management is often overlooked and under appreciated.
Today I bring on Michael Toma, who has a long history as risk manager and a trader, to talk to us about not only the importance of risk management but how risk management has to do with a lot more than just stop management and loss reduction.

Mike has a great way of bridging the topic of risk and helping traders understand the applicability of risk management not only to our trading but to the sustainability of your trading business.

Michael Toma, CRM, is a frequent speaker of the Trader Expo circuit and is the author of The Risk of Trading: Mastering the Most Important Element in Financial Speculation  (2012) and Trading with Confluence: A Risk-Based Approach to Trading Equity Index Futures (2010). His unique “focus on the risk” approach to trading using data-driven risk analytics has attracted professionals seeking improvement in their trading performance as well as new traders seeking a consistent and transparent approach to the markets. Mr. Toma also received the Certified Risk Manager (CRM) designation for risk management excellence from the National Alliance in 2007. In addition to his experience as a corporate risk specialist, he actively trades the US-based equity index and index futures markets as well as the equity markets in mainland China.


Big Ideas

In the show we talk about –

  1. The 4 areas of risk management – Identification, Assessment, Control, and Measuring & Monitoring
  2. The importance of trader development
  3. Why the focus of your trading needs to be on business plan execution
  4. Why it’s important to develop key metrics around compliance and to reward yourself for trade compliance and not P&L
  5. Why you need to fire yourself as a trader and instead hire yourself as a project manager
  6. The importance of structure in your trading and finding accountability
  7. Why Price and your P&L are the 2 biggest distractions to your trading and a really cool exercise on trading using just internal indicators
  8. Think of your strategies as your employees
  9. Mike share’s a great tactic on how to increase the size of your position responsibly


One of biggest benefits of trading is that you’re your own boss; one of the biggest downsides of trading is that you’re your own boss.

[Tweet “Your new job is simple; execute this plan.”]

[Tweet “Losing trades are not a failure; failure is defined as not executing a plan effectively.”]


Resources Mentioned

Why Traders Need A Development Plan by MoneyShow


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Episode 9 – Why professional traders don’t measure their performance in dollars and cents w/ Michael Toma

by editor time to read: 55 min