Float

The number of shares actually available for public trading.

Also called: free float · public float

In plain language

Float excludes shares locked up by insiders, founders and restricted holders. It is the supply that can genuinely change hands.

A small float means limited supply. The same buying pressure produces far larger price moves than it would in a widely held stock.

Low-float stocks are correspondingly dangerous: wide spreads, violent gaps, and stops that fill far from where they were placed.

Worked through

A 4-million-share float meeting a day of real interest

Shares outstanding: 30 million
Held by insiders and locked up: 26 million
Actually tradeable: 4 million
Normal daily volume: ~250,000

Market cap is calculated on all thirty million shares. Price is set by whichever fraction of the four million happens to be for sale, and on a quiet day that is a few hundred thousand. The stock is far smaller, as a market, than its headline valuation suggests.

This is why low-float names move the way they do. It does not take much buying to exhaust the available supply, so moves of 30 or 40% happen on news that would barely register elsewhere — and the same mechanism works in reverse when everyone wants out.

For a stop, that thin supply is the problem. The order triggers into a book with very little resting size, and the fill can land far below the level. The risk calculation assumed a price the market could not provide.

So the honest adjustment is not a wider stop — it is a smaller position than the arithmetic suggests, on the grounds that the arithmetic is built on an assumption this instrument does not support.

Why it matters

Float is one of the best available predictors of how badly a stop might slip, which argues for smaller positions in low-float names regardless of what the risk math says.