What Warren Buffett and a World Poker Champion have in common....

Hey traders! That exclamation mark is probably the only excitement you've had if you've been trading recently. The market's have been fairly quiet post US election as reality settles in on issues surround the US fiscal cliff, Eurozone worries and a new Chinese government.

However, this quiet period is just part of the process where the market gets rid of the weak and keeps the strong. For the weak minded traders with lack of patience and discipline will keep trading, lose and naturally give up. The strong minded traders are waiting on the sidelines with their research and analysis, making them ready to attack when the right picture starts to unfold.

We all know the most efficient and effective pathway to success is to emulate the great traders out there. On Monday I was fortunate enough to have a live Q&A session with Jack Schwager and Larry Williams. People always ask me, at your level why go to these events. I simply say because life never stops, always aim to be better, to learn more and be the best you can be. In my previous posts you all know the importance I place on surrounding yourself around the right people with the right mindset. Some people messaged me saying they don't have access to people like that. I simply reply saying you have access to millions of books, videos where you can gain inspiration and motivation.

As this is a time to be patient and follow rules, I though I would share with you some rules from the great Warren Buffett and also two times World Poker Champion Puggy Pearson. One is a professional investor/money manager and one is a professional gambler. Let's have a look at their top three rules, from their books and interviews:

Warren Buffet

• Rule 1: Never lose money. Rule 2: Never forget rule No.1 - minimise your losses by understanding how your strategy works and why you are trading it
• The market is designed to transfer money from the Active to the Patient - consistent returns come from those who wait for the best opportunity to present itself before making a commitment. Would you buy a house with the same analysis you've done as this trade you are about to put on? They're both investments of your hard earned capital!
• The most important quality for an investor/trader is temperament, not intellect - independent thinking and confidence in what you believe in and are doing are far more important than knowing everything there is to know

Puggy Pearson

• Knowing the 60/40 end of a proposition - understanding the odds of any bet. As a trader we should aim to find the best opportunities with the odds in our favour. How many reasons do we have to buy or sell here?
• Money Management - minimise losses on each opportunity and understand reward to risk 
• Know yourself - do everything you can to remain disciplined and not blow yourself out of the game before you've even started

What's interesting is that the same traits are required when dealing with investing money to make money and they all come down to psychology and the mindset. 

I'll be honest and say that I was not the most disciplined person this month and subsequently took a few losing trades. Why? From my analysis I do every week - over confidence. After one great trade, greed can kick in. This is why it is so important to be on top of your game everyday and remain focused and humble. 

As always, if anything DECENT pops up I will post it!

Happy trading and Happy New Year to some of you (it's the Indian New Year!).