One extreme to the other

Monday, 5th July 2010 10:15 - by Boredmum

As mentioned in past Blogs, I have traded Nautical Petroleum (TIDM code: NPE) and Encore Oil (TIDM code: EO.). NPE was turning out to be a little success story for me and I was doing quite well out of it. I had 3 successful trades where I had taken profit and I was holding some shares at a higher average of around 142p. Now, the only reason I was still holding these shares was because the others had been purchased at a lower price and then sold for profit. I was waiting for the sp to go higher so that I could offload my last lot. Rumours started circulating on the Sunday; a newspaper with some credibility had reported that Encore Oil had a substantial find in the North Sea. EO. is a 15% holder, as are NPE, so this was great news. I was only looking to take 10-20 points from my trade, but because of this news I managed sells at 203p and 179p. Absolutely fantastic…couldn’t have hoped for more and was feeling on top of the world. Unfortunately, I was rather quick to spend my gains. Seeing that Regal Petroleum (TIDM code: RPT) was down at a lowly 35p, I just had to snap some up. I figured that this was good for another run up to 40p. Just as I purchased, rumours started circulating of suspended Ukrainian operations. Some were saying that it was an elaborate hoax and I chose to believe that, although I should have been more aware of the consequences. The sp fell quickly. I took some more at 27p. The company brought out an RNS to state that these rumours were untrue. They had been requested to stop production, but due to ongoing dialogue, production remained and they were confident it would continue to do so. I bought some to trade successfully, and then purchased my second trading lot, only to find that the Ukrainian Minister of Environment had given a press conference to back up the original rumour. I sold as the story was only minutes old. ‘I have to react quickly’ I told myself. I had racked up a loss in 24 hours that had equalled 2 weeks of successfully trading NPE. There was debate as to if there was any truth in the press conference. I scoured internet sources to desperately find some information and made the decision to buy back in. I wasn’t sure if I was doing the right thing; I hated the doubt, but this was going to go one of two ways and I felt a little silly for taking the risk. Luckily, I got in at a lower price than I had sold for. Then - you just couldn’t make it up - the Ukrainian Minister gets sacked from his post and replaced…RPT have confirmation that drilling is to continue. As I type, the sp has been creeping back up. Let’s hope we see it come back to my old average of 32p. I definitely went from ‘one extreme to the other’ and hope that I am not in that position again.