Float
Definition
Float is the number of shares of a company that are actually available for public trading — it excludes shares held by insiders, major institutions with lock-ups, and the company itself.
Example
“The company had 50 million shares outstanding but only 3.2 million were in the float. With news pushing heavy volume, even a small surge in demand caused a 40% move in 90 minutes.”
Detailed Explanation
Float is one of the most important variables in day trading momentum stocks. Simple supply and demand: with fewer shares available, any spike in buying demand has a disproportionate effect on price. A low-float stock with, say, 2 million shares and suddenly 5 million shares trading in a morning session means the entire float has turned over 2.5 times — that's extraordinary demand relative to available supply, and it can create moves that seem impossible on higher-float names. This is why low-float stocks are central to momentum and small-cap day trading strategies.
The generally accepted thresholds: ultra-low float is under 5 million shares, low float is 5–20 million, medium float is 20–50 million, and anything above 100 million is considered high float. Most large-cap stocks (Apple, Microsoft) have billions of shares in float and are essentially immune to the float-driven squeeze dynamics that make small-cap trading exciting. Day traders looking for those explosive intraday moves typically focus on stocks with floats under 10 million with meaningful catalysts.
Low float comes with a serious catch: it also creates elevated risk. When a low-float stock moves up 50% and then the catalyst fades, sellers can materialize with no buyers underneath. The same thin float that caused the spike can cause a violent reversal. Position sizing on low-float momentum plays needs to account for the possibility of fast, gapping moves against you. Never size up just because the potential move is larger — size relative to your risk on the stop, not relative to the hoped-for upside.