Warren Buffett’s 3 Top Golden Trading Advises

Source : http://takimag.com/article/the_orifice_of_omaha

Source : http://takimag.com/article/the_orifice_of_omaha

Warren Buffett’s 3 Top Golden Trading Advise

Thanks to one of my friends whom direct me to this source.(listed at the end of this article) And i found a few important pointers from one of the greatest financial brain in our times, Warren Buffett, which can be applied to  Trading.

 

1) Invest Trade unemotionally.

Stock Market are influenced by Greed and Fear. And these two are the main forces for some of the spectacular Bull and Bear home run. And in order to trade successfully in a consistent manner, a thorough study of human psychology is need. Human brain is hardwired to focus on survival, and as such, it make trader more likely to chase stock to the when it gap up, later to realize the stock suffer from slow death. Or holding on to the losing trade till it is 80% into red, sell it off and watch in horror when the stock turn northward from there. Learn how emotions lead to cognitive errors, and avoid those common errors.

2) Be patient.

Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient Patient. Did you get impatient after realize i been typing so much of this word “Patient”? There are a lot of times where trader rush and quickly get into trading position for fear of missing out(FOMO) and end up winding up the position. Be patient and be disciplined with your own trading criteria and setup. You do not need to trade every single day, instead let the trade come to you!

3) Be selectively contrarian.

Warren Buffett’s saying of “fearful when others are greedy, and greedy when others are fearful” speaks strongly for his contrarian style. I will also say, that saying summarize up what human psychology is all about. Based on “fearful when others are greedy, and greedy when others are fearful”, should you dive in when the stock gap up or perform a panicky sell when it gap down? Be a contrarian but in a selective manner.

 

Source : http://www.businessdictionary.com/article/896/investing-lessons-of-warren-buffett/

Source : http://channel.nationalgeographic.com/brain-games/articles/you-are-hardwired-to-survive/