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Thursday, May 19, 2022

A Small Powerful Story of Warren Buffet that will avoid big loss in your Trading Life
2 mins well spent

I like to share this small powerful story today about Warren Buffet and Bill Gates. that will help you to avoid big losses in Trading Life. 

I once heard a story of Warren Buffett playing golf with Bill Gates and their group of friends, not sure if it is a true story, but I found the story behind it very powerful. And also, personally I don’t play Golf so please pardon me if certain terminology is inaccurate. The group of friends came to the Par 3, which is apparently the one which has the highest chance of scoring a Hole In One (hitting the ball into the hole with just one stroke.)

Golf one shot with stick warren buffet

Warren got into position to take his turn when one of the friends called out “Hey Warren, just have a bet. If you hit a Hole in One, I will give you $20,000!”

Warren turned and ask, “And if I miss?”

“Well… if you miss, you pay me $20.”

Warren thought about it for a second and said, “Bad odds, no deal!”

The group was shocked that Warren would not take up the bet. After all, he was risking $20 for $20,000.

They questioned, “What do you mean bad odds?”

Warren replied, “The bet is $20,000 is to $20 which means the odds is 1000 to 1. But that chance of me hitting a hole in one is less than 1/1000, so bad odds, NO DEAL.”

Bill Gates went to Warren Buffett, “Come on Warren, you are a billionaire and it is only $20. Can’t we have some fun?”

Warren’s reply was very profound, he said, “Stupid in Small = Stupid in Big”. To Warren, if you are stupidly managing a small sum of money, you will be stupid in managing big sums.

Stupid in small equals stupid in big

“If I do stupid decisions with small money, I will definitely make the same stupid decisions with big money too” – Warren Buffet.

How you do anything is how you do everything – T. Harv Eker

As a trader, please gain confidence trading with small money and small lots first, then you can trade with big money with big lots. If you do stupid decisions with small money, you will do the same with big money. Please create a habit of trading with confidence using small lots instead of trading high lots and taking emotional decisions in your trading account.

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