The float is number of shares of a stock that are available to trade on the open market. These shares can be owned by anyone. It is important fundamental characteristic to understand about a stock before investing into it. A stock’s float will often influence a stock’s range.
Why Pay Attention To Float?
A stock’s float is essentially telling you how much supply of a stock is available on the open market. Stocks with a low float, also referred to as low float stocks, tend to be the most explosive stocks. This means they are the stocks that have a high probability of making a big move in a short period of time. The stock MBOT is an example of how explosive low float stocks can be:
Low float stocks tend to have less liquidity and larger spreads, while higher float stocks tend to have tighter spreads and more volume. High float stocks can still make big moves on news-based catalysts, but is a lower probability because there is much higher liquidity and supply of shares. A low float stock is defined as a stock with less than 100 million shares in their float. Learn more about how to trade low float stocks here.
