CitiGroup - why did it drop today?

[willcrook]

Hello,

I'm quite new to trading and have been spread betting for a couple of weeks.

Considering todays positive news about Citigroup I backed them to go up, yet they have dropped significantly and i've lost quite abit of money.

Just wondered if anyone here could help me understand why?

 

[Masquerade]

erm...they haven't dropped significantly?

 

[willcrook]

they've dropped and i've lost from it.

it's down 11.5 pips, i'm just confused that it's down atall and the market has reacted to the news in a negative way.

 

[Martinghoul]

Rate for conversion of preferreds not as optimistic as expected, I understand. Earnings crappier also.

 

[Masquerade]

You've gone and over-leveraged yourself haven't you? It's down a few % - that's chicken feed for US stocks. Besides...people take profit. It wasn't long agp they were around the $1 mark.

 

[rathcoole_exile]

A movement pervaded Lower Manhattan offices to formally call in all Citigroup shorted shares on loan. Whether legal or not, it helped cause a big bank stock rally. Other ‘C’ share games were played that enabled preferred shares to serve as collateral on common share shorts, as the plebeian shares descended to $1/share
I guess now it's time for settling scores.

Also, if you're new to trading, I'd seriously avoid trading on Options expiry days (3rd Friday @ month)

 

[Mr. Charts]

"pips"
I assume you mean cents.
Personally I never trade a news story, only the market reaction to that news.
You cannot expect fundamental news to ALWAYS be reflected in intra day movements - it simply doesn't happen like that often enough to be a consistently profitable approach.
I didn't trade C today, but looking at the chart there was a very easy 20c to be made when it broke down.
Richard

 

[willcrook]

Thanks for your insight, I realise now that i've not researched enough before actually putting money down and have paid the price.

 

[mahi120]

Thanks for your insight, I realise now that i've not researched enough before actually putting money down and have paid the price.

Hey willcrook, don't beat yourself up, this is just warm up, and you will lose more than that trading so get prepared.
Now to answer your question about drop in price.
Most good traders buy in ANTICIPATION of good news and sell the FACT (news is known to all).
In your case today you bought the fact, hope it makes sense.

 

[willcrook]

I've lost about 1,000 GBP in 2 days. i'm 20 years old.

I'll be switching to a demo account till i've got the hang of it more.

again thanks for your advice.

 

[elitejets]

There was a short squeeze in Citi because of arbitrage converting the Govt stake of preferred to common stock. A conference call ended that. Squeeze over, price drops.
Citi Assuages Arbitrageurs on Conference Call - MarketBeat - WSJ

If its any consolation you just learned a really good lesson so consider it an investment in your trading education
I have had a few of those myself ...

 

[foredog]

Buy on the rumour sell on the fact

(or reverse if the rumours bad)

Without looking at a chart or anything..........Banks have all had a good run recently so the results would have to be out of this world to justify a bigger rally...thus profit taking.

News is the catalyst but price will (hopefully) show you the reaction.

 

[clbfjc]

What do people think of Citigroup around the $3 a share mark. A good long term play?

 

[N Rothschild]

no, citi will be lucky to survive another death roll in the economy if we get one, which i think we will

citi will fail eventually imo

 

[wfo]

"If" you play Citi - I'd advise to only take a small position (to the extent that you wouldn't lose sleep if you lost the lot) due to the risks Genics mentions above. However, your small position could soon be a big one "if" it makes it... Bottom line = it's a big punt!

 

[joe4422]

There are so many other things out there to trade, I don't see any wisdom is playing with something like C. BAC has been giving great returns on day or swing trades. Or you could trade FAS, again very great for day trades.