Wednesday, 10 November 2010

Level 2

Hi, my name's Mark and I'm a Level 2 addict.

I signed up to Interactive Investor's Level 2 service last month. I've been curious about it since I read The Naked Trader by Robbie Burns. For those who haven't heard of Level 2, it gives immediate access to share prices. Most share data one sees online is at least 15 minutes out of date. This is not a problem most of the time but I have found it extremely frustrating to buy a share only to find the price had reached a peak and then started to fall immediately afterwards. Unfortunately, I have not been able to use Level 2 to avoid this. In fact, if anything, my trading seems to have gotten worse ever since I signed up for it!

I have been doing some research on and watching a small AIM traded company: Berkeley Mineral (BMR) for months. In July I finally received money from funds we had set up seven years ago for our children. I had closed these down and requested the money be returned as the funds had failed to increase in value over those seven years and had actually made a slight loss. Even worse when inflation was taken into account.

I decided to invest the money in Berkeley Mineral. It was a high risk investment and I made a decision that if the investment made a loss I would replace that loss out of my other investment. My plan was that by managing my own small fund, different investments would have shared risk and shared benefit and reduced fees.

The share price had been hovering between 1.8 and 2.2 pence for a couple of months then the share price did go up over fifty percent but then retraced on delays. I sold out at 2.26p regretting not having sold at fifty percent profit and thinking it was just what is known as a 'pump and dump'.

But I sold at the bottom and the share price started climbing. I decided to buy in again but had to pay more and so purchased less shares. By October 22nd, the share price had gone up and down several times. I started to get concerned as Berkeley Mineral reported delays in signing a crucial contract. I posted on the Interactive Investor forum my own concerns that this was just a 'pump and dump' and I sold at 3.3p, again making a small profit.

Never post a SELL recommendation on a share dealing forum. The easiest way to get hate mail in the world!

My timing was terrible. The share price started to move up again. Went past the previous high and kept going. I signed up for Level 2 a few days later and then began some truly inspired foolishness.

Between the 25th and 26th of October I bought and sold Berkeley Mineral five times, nine trades in total. I finally sold my holding on the 27th having realised that I could not use Level 2  to decide when to buy or sell. I bought believing a peak had been reached only to see the share price fall. I sold to minimize my losses only to see the share price rise!

I thought by the end of the 27th that I had made a total loss of around £400. It actually wasn't that bad. Taking into account previous profits on Berkeley Mineral deals, I was left with a profit of £80. Woopee. Except, If I had only made the one purchase, back in August. Then left that purchase alone, it would now be worth over £3,000. A 200 percent profit in just over two months.

I would not normally share this kind of detailed information about what shares I have or don't have but may this serve as a cautionary tale. I am kind of hazy about order of some of these buys and sells and my stock broker account does not seem to have sorted them in correct time of deal order so the table below is my best guess. I am going to cancel my Level 2 account now and try and learn from the experience.

Finally, I still own 500 Berkeley Mineral shares, just to remind myself...


Date Buy/Sell Stock Quantity Price Purchase Cost Sale Value Balance
02/08/10 Buy BERKELEY MINERAL R ORD GBP0.01 48780 2.05p £1,017.94
-£1,017.94
21/09/10 Sell BERKELEY MINERAL R ORD GBP0.01 48780 2.26p
£1,089.48 £71.54
23/09/10 Buy BERKELEY MINERAL R ORD GBP0.01 36122 2.65p £974.97
-£903.43
22/10/10 Sell BERKELEY MINERAL R ORD GBP0.01 36122 3.30p
£1,179.08 £275.65
25/10/10 Buy BERKELEY MINERAL R ORD GBP0.01 50000 4.33p £2,188.78
-£1,913.13
25/10/10 Sell BERKELEY MINERAL R ORD GBP0.01 47959 4.45p
£2,121.23 £208.10
25/10/10 Buy BERKELEY MINERAL R ORD GBP0.01 48459 4.08p £1,999.97
-£1,791.87
26/10/10 Buy BERKELEY MINERAL R ORD GBP0.01 46829 4.80p £2,271.98
-£4,063.85
26/10/10 Buy BERKELEY MINERAL R ORD GBP0.01 44297 5.05p £2,258.14
-£6,321.99
26/10/10 Sell BERKELEY MINERAL R ORD GBP0.01 44297 4.66p
£2,054.29 -£4,267.70
26/10/10 Buy BERKELEY MINERAL R ORD GBP0.01 40890 4.97p £2,053.99
-£6,321.69
26/10/10 Sell BERKELEY MINERAL R ORD GBP0.01 46829 4.80p
£2,237.84 -£4,083.85
26/10/10 Sell BERKELEY MINERAL R ORD GBP0.01 50000 4.57p
£2,272.55 -£1,811.30
27/10/10 Sell BERKELEY MINERAL R ORD GBP0.01 40890 4.65p
£1,891.44 £80.14

1 comment:

  1. even though you did by your own admission, mess up the trading - it does show you can spot a good investment opportunity - just leave it alone next time!

    cheers

    Naomi

    ReplyDelete