What is a Low Float Stock?
Specifically, a low float stock is a stock with a tiny amount of outstanding shares available. Outstanding shares are shares that are not reserved or claimed. Float refers to the shares that are available.
Low float stocks generally have higher spread prices and higher volatility, because of these factors there is less supply which creates a bigger demand so the prices goes up astronomically in some cases. Stocks with low float have a consistent fluctuation within price making them advantageous to day traders because of the increased volatility.
In simple terms, Low Float Stocks are highly volatile, fast moving stocks that when have a true catalyst can make some of the biggest moves in the market in a day which can be very profitable, but also very dangerous. Please understand that trading low float stocks can be a high level of risk. It’s best to understand as much as you can before trading Low Float Stocks.
What are some things to look for in Low Float Stocks?
The most important thing are TRUE catalysts, which could include breaking news or important filings and of course volume is very important when looking at a low float stock.
Some of the most important key factors to a Low Float Stock is Volume, Range, Relative Volume and News. When the combination is correct, you can see some of the biggest moves of your life.