Low float stocks have high volatility making them desirable to some but they can be scary to others because of the lack of available shares. If news breaks and the price falls, there is not a lot of cushioning to help bring the price back up. The news strongly impacts this type of stock because of their supply and demand ratios.
What is a Low Float Stock?
A low float stock is a stock with a low amount of outstanding shares available. Outstanding shares are shares that are not reserved or claimed. Float refers to the shares that are available. One way to find float is to take the total number of shares and subtract the number shares that are already owned by insiders. Low float stocks typically have around 15 million available shares or less.
Low float stocks typically have higher spreads and higher volatility, because of this there is less supply and bigger demand so the price goes up.
Stocks with a low amount of float have a constant fluctuation in price making them favorable with day traders because of the increased level of volatility. Traders who tend to purchase large quantities of stock could have leverage when trading stocks with low float because of how the price fluctuation. Knowing when to get out would be very important.
How to Find Low Float Stocks
Benzinga Pro offers a Screener tool to find float. You can set parameters and filter for what you’re looking for such as:
- Specific dollar amount
- Float percentage
- Shares outstanding
- And so much more
There is an option to save the parameters you’ve chosen so it’s easily accessible for the next time.
What to Look For In Low Float Stocks
News catalysts and volume are important when looking at low float stocks. They are both good indicators of stock health.
News catalysts are extremely important when it comes to low float stocks, so keeping track of what’s happening is necessary. It could be possible to profit from both the rise and fall of a stock but understanding what the news is telling you is vitae.
Volume means movement. Movement means transactions. Volume can help a trader understand the health of a stock as well as how the performance of the movement is.
Low float stocks are stocks with a low amount of shares. The demand is typically higher than the supply so the price is increased.
Given the right tools, stocks with low float are great for day traders because of their increased volatility because of the high demand. With that being said, what goes up must come down. As fast as low float stocks can go up, they can go down just as fast.
News and Volume are good indicators of stock health and are important to monitor when looking to trade low float stock. Tracking movements and headlines could allow traders to maximize their strategies.
Benzinga Pro provides traders with news as soon as they hit the headlines as well as filters to find the information needed to stay up to date.
Disclaimer: Benzinga is a news organization and does not provide financial advice and does not issue stock recommendations or offers to buy stock or sell any security. Benzinga Pro is for informational purposes and should not be viewed as recommendations. Benzinga Pro will never tell you whether to buy or sell a stock. It will only inform your trading decisions. You can find our full disclaimer located here.