George Soros and Warren Buffett are two of the greatest investors of all time. Buffett is now the second-richest person in the U.S. and a household name, having made Berkshire Hathaway into one of the most successful companies in the world. George Soros became the 17th-richest person in the U.S. through a career in investing, and he made his name with a successful bet against the British pound that earned him $1 billion and the nickname "The Man Who Broke the Bank of England."

While Buffett and Soros are massively successful, they have made numerous mistakes over the years. How they deal with, mitigate, and learn from their own mistakes has been one of the keys to their success. Read on for more on their process and how you, too, can make big mistakes and still be successful. 

Soros on mistakes

My conceptual framework, which basically emphasizes the importance of misconceptions, makes me extremely critical of my own decisions. I know that I am bound to be wrong, and therefore am more likely to correct my own mistakes.

Source: World Economic Forum via Wikimedia Commons.

Soros' quote is a good reminder to investors that everyone makes mistakes. In investing, you're doing great if 60% your calls turn out to be right, so it's important to acknowledge that you will make mistakes. This will help you recognize and correct those mistakes as quickly as possible.

If a stock you own is down, you must determine whether you made a mistake in assessing the stock or whether your reason for buying the stock still applies and it is worth adding to your position. The same is true in the opposite case. If you didn't expect much from a business that then saw greatly improved results and a nice stock spike, you might not be inclined to buy in after missing out on the price jump. But whatever scared you off the first time may have been resolved, so you need to re-evaluate the stock.

Warren Buffett provides a great example. Buffett has had a position in Tesco (TSCD.Y -0.64%), the dominant U.K. grocery chain, since 2006. In 2012, he added to his stake in Tesco to the point that he owned 5% of the company -- even though the company's results were suffering in the U.S., as well as at home in the U.K., as the business expanded around the world.

While Buffett made his move when the business was trading at a low valuation, he didn't realize how bad things would get for Tesco. The business has continued to worsen, and pressure on management has grown. Management has reduced its forecast for the year in each quarter of 2014, signaling that executives underestimated how bad things truly were, yet Buffett held on to the stock. As of August, the stock was down 35% for the year. Buffett would have saved a lot of money by abandoning his position.

In September, the company announced that its earnings had been overstated by 250 million pounds for the first six months of this year. The stock is now down 44% in 2014, 35% below where Buffett added to his position. Buffett has since said in an interview with CNBC: "I made a mistake on Tesco. That was a huge mistake by me."

Limit the impact of your mistakes
This brings me to another great quote from Soros:

It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.

While Soros has been wrong numerous times, he limits his losses, so his good calls have more than made up for his bad ones. For example, Soros bought a 7.9% stake in J.C. Penney (JCPN.Q) in early 2013 after the CEO, former Apple executive Ron Johnson, left the company. The general idea was that returning to J.C. Penney's old ways of doing business would bring consumers back. However, the store did not turn around as hoped, and the stock continued to decline.

Instead of waiting around for the stock to improve and recoup his cost, Soros exited his position by the end of the year, at a net loss of 40%-50%, in order to free up capital for better bets. However, while this was a considerable loss percentage-wise, the position was small enough that it didn't make a huge dent in Soros' results. Soros limited this risky bet to a small percentage of his fund. Soros' fund still made an estimated $5.5 billion last year on numerous other holdings.

With Buffett, the same holds true. Buffett has lost about $1 billion on Tesco. In the worst-case scenario, if the stock goes to zero, Buffett's losses are capped at the level of his total investment, which is now about $1.7 billion. Yet Buffett has made tens of billions on numerous other bets during that time frame, including an estimated $15 billion on his 2009 purchase of railroad Burlington Northern Santa Fe.

The key to Buffett's and Soros' success is having a process that limits how much they lose when they are wrong. Then they learn from their mistakes and become better investors over time.

We all make mistakes in investing; it is inevitable. What you can control is the size of your investments. Limit your exposure to high-risk investments and diversify your portfolio so that one major loss won't crush you. That way you can rebound from those losses and move on, having become a wiser investor.