You deserve to know the truth about the float!
And here it is … The float is half the puzzle.
You’re about to get the down-and-dirty version with no hype. Read on to discover exactly what the float is, why it matters, and how to use it when trading…
The float is the number of shares available to the public for trading. You can look up the float at a number of financial information websites.
When I build my watchlist, this is one of only a few pieces of information I look up for every stock on the list.
Why The Float Matters
Markets move based on supply and demand.
When demand exceeds supply, it drives the price up.
The float is the supply. It’s that simple.
Now let’s talk about demand…
There’s no perfect measure of demand. Volume gives us a hint, but it’s not a complete picture.
When the float is low, the supply is low. The lower the float, the less demand it takes for the stock price to spike. Now here’s what you really need to know…
The only things that can drive price change in the stock market are supply and demand.
The Float for Day Traders
As an active day trader, I consider any float under 20 million to be “low.”
As a day trader, I want to see my minimum volumes met before taking a trade. And I’m willing to accept a lower volume with a lower float.
Here’s my table for reference:
Float Minimum 15-min/average
Under 20 million 100,000 shares
Between 20 & 30 million 200,000 shares
Above 30 million 250,000 shares
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