Tower Resources (TIDM code: TRP)

Sunday, 24th May 2009 16:17 - by Boredmum

Today, I want to focus on one particular share; Tower Resources (TIDM code: TRP). I will talk you through my trading experience of it. It could be any share that I’m talking about and you may even recognise some of the points from a certain stock that you have bought. Last year, I was very new to trading. I had success with my first buy and was at the stage where I was dipping my toe in the water. I had bought a few shares and nothing was doing particularly well, though I noticed TRP was on the rise. It had gone from about 3p to 5p when I bought in, and they had released an RNS about the possibility of 10 billion barrels of oil in Namibia. The sp went to about 6p, but I didn’t have access to level 2 or live prices and some of the guys following it on the thread mentioned that it was dropping off (nothing ever goes up in a straight line). Well, I panicked. People were saying that it had already risen too much, so I sold around my break-even point and was so glad that I hadn’t lost anything. So, I then went out shopping and came home to see the sp was now twice as much at 9-10p. Rather than leave it, I bought in again. I paid twice as much for the original shares I owned. There is a lesson to be learned here - never go chasing the sp. There will always be other opportunities…if you’ve missed the boat, then let it sail. Of course, the sp did drop off after the initial euphoria. It didn’t just drop really fast, it tailed off. When it was gradually dropping, I stayed in. I knew nothing of stop losses at the time and kept thinking it had stopped falling. I did everything the wrong way: I bought too high, had no stop loss, and had done my research ‘after the event’. The thing is, the more I did research on the company and management, the more I had a good feeling about it. So, I averaged down (3 times in all) and brought my average down to 4.3p. One year later, TRP are about to do their first drill in Uganda for what could be an anticipated 100 million barrels of oil. The sp is 6.13p as I write, and I may possibly reach my goal soon of selling half and letting the other half run risk-free. I managed to turn around a bad situation. However, I wasn’t so lucky with all my ‘newbie’ purchases!