Float refers to the total number of shares available for public trading in a company's stock. It excludes shares held by insiders, executives, and large institutional investors that aren't typically sold in the open market.
Why Float Matters:
- Low Float Stocks (small number of tradable shares) tend to be more volatile since limited supply can cause rapid price swings.
- High Float Stocks (large number of tradable shares) are generally more stable with smoother price movements.
- Many traders watch float size to assess potential liquidity and price manipulation risks in a stock.
Companies with a low float can experience extreme price fluctuations, making them attractive to day traders and short squeezes. See also: Short Squeeze