GLOSSARY // Day Trading
Low Float
A low float stock has a small supply of freely tradable shares — commonly defined as under 10-20 million, with the most explosive movers under 5 million. Float excludes insider holdings, restricted stock, and other locked-up shares, so it can be a fraction of shares outstanding.
Small supply is the whole story: when a catalyst brings real demand to a 3M-share float, there is simply not enough stock to absorb it, and price moves in multiples instead of percentages. The same mechanics work in reverse — low floats collapse as fast as they run, and spreads gap wide the moment momentum stalls.
A shipping stock with a 2.8M-share float and a $4.10 close catches a sector headline. It trades 45M shares the next day — 16 times its float — and prints a $4.10 to $13.80 range before closing at $7.25. A comparable move in a 500M-float large cap would require tens of billions of dollars of buying.
Put it to work
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.