In this article, we will explore what high float stocks are, and give tips on how to trade low float stocks. We’ll also find out what does the float mean in stocks for trading decisions. Getting an idea of all this information can help you become a better trader.
How to Find Low Float Stocks
Before we dive into high float stocks, it’s important to understand float stocks meaning and how to find them. A stock’s float refers to the number of shares available for trading by the public. So, when there’s low float stock, it means there’s a small number of shares available for trading. This number is typically fewer than 10 million shares.
To find small float stocks, investors use a stock screener that allows them to filter stocks based on their float size. There are also websites that provide a list of low float stocks, such as those with less than 5 million shares available for trading.
Understanding the Meaning of Float Stocks
As mentioned earlier, a stock’s float refers to the number of shares available for trading by the public. Shares held by insiders in the company such as executives, as well as institutional investors, such as mutual funds are excluded.
When you know “what does low float mean stocks”, you’ll also know that a company’s float can have an impact on its stock price and volatility.
On the other hand, high float stocks have a large number of shares available for trading. This number is usually more than 100 million shares. These stocks are typically less volatile than low float stocks. That’s because a large number of available shares means that it takes more buying or selling pressure to move the stock’s price.
Best Low Float Stocks for Trading
Now that you understand what is the float in stocks, let’s explore the best low float stocks for trading. You’ll need to do some research using a low float stocks screener, for example. Some of the best low float stocks for trading include those with strong earnings and revenue growth, a solid business model, and strong management.
So, when looking at a low float stocks list, keep these additional factors in mind. Usually, big, well-established companies will be on this list. In the last few years, companies such as Omeros Corporation (OMER), Novavax Inc. (NVAX), and Rocket Companies Inc. (RKT) have performed well with low float stocks.
Advantages and Disadvantages of Low Float Stocks
There’s more to this topic than just knowing what does free float mean in stocks. You need to also be aware of the benefits and drawbacks of trading them. To start, low float stocks can offer high volatility and potentially large gains. However, they also come with significant risks.
The biggest advantage of low float stocks is the potential for big profits. These stocks can experience big price movements within a short time. This means that there’s the potential for large profits. So, when asking “Are low float stocks good?”, the short answer is “yes”.
On the other hand, there are some disadvantages to be aware of. Big price movements also mean investors can also experience large losses when it comes to low float stocks. Also, these stocks can be susceptible to manipulation by traders. This leads to massive price swings, which makes investors vulnerable to high volatility.
Top Low Float Stocks with High Short Interest
To further understand whats float mean in stocks, let’s consider what to look for when finding the best low float stocks with high short interest.
So, when a stock has a low float and high short interest, it creates a short squeeze. This is when traders who sold short are forced to buy additional shares to cover their losses. As a result, the stock’s price goes up even further.
Many big-name companies have experienced significant price movements in the past due to the combination of low float and high short interest. At the end of the day, knowing what is float stocks is not enough, You should also check other factors, such as the short interest.