tradersams blog

Well there you go – if you don’t do your homework in this game, things can go wrong – very wrong.

BPT:  I was stopped out of my Beach Petroleum position a day or so ago and didn’t know.

As noted in the entry on the buy, I entered this trade with a warrant (BPTBOK) to get leverage into the position.  The warrant had an expiry at $1.37 – which was a level hit by BPT recently when it dipped recently when a capital fund raising was announced .  In light of the target being hit, the warrant has expired and I’ve done my dough.

Well – not quite – I have two saving blessings:

• The warrant does not expire worthless, I am refunded a residual payment, meaning I lose about 50%, not 100% of my investment
• I took the high leverage into account, thus having a small position size.  This effectively has left me with a 2-3% portfolio loss, which is not unreasonable for a trading error – as opposed for a poorly managed stop.

So this trade has certainly not gone according to plan.  The loss taken by the fall in BPT was within the parameters of SystemA, however I am now out of the position and the share is not in a place I would enter at this stage.