Low float stocks can be very risky to hold because they can have violent moves in either direction. The idea is to limit stock selection to those that have higher odds of making an explosive run over a short period of time. Swing traders thrive on rotating the portfolio of stocks they trade when market conditions are strong, and proper stock selection is key to raking in the big gains thereafter. That representation makes it more easy to understand the trading strategies. Cancel Reply Notify me of follow-up comments by email.
I now stick with screens that only show good liquidity even if the backtested returns are phenomenal. Out of interest, are there any screens you are using to find stocks with a tight trading range or reversal candle or surge in volume?
Yes, we scan for stocks breaking out of a tight trading range, both manually and with the Morpheus Stock Screener. To find out more about our strategy for manually finding these stocks, check out this blog post and this one. That representation makes it more easy to understand the trading strategies. We do swing trading, not intraday trading. However, the Morpheus stock screener can help you find high momentum stocks on EOD basis that you may be able to trade intraday. Also, The Wagner Daily newsletter offers swing trading stock picks with exact entries and exist, but again it is not intraday.
Notify me of follow-up comments by email. Check out these related articles: Jeremy — Thanks for your comments. Glad you liked the article. Glad you enjoyed the article. Hello Atul, We do swing trading, not intraday trading. Leave your comment below! Cancel Reply Notify me of follow-up comments by email. Latest Tweets My Tweets. Follow Us Around The Web: Past results are not necessarily indicative of future results. One reason could be its low float. What does this message mean?
Why should we understand it? We hope this talk can help new traders and investors better understand the market. In your opinion what defines a low float stock? For me any stock with a float fewer than 15 million tradable shares is low float. Keep in mind that the float is different than the shares outstanding. The shares outstanding include restricted shares that are given to insiders and require permission from the SEC to be traded.
So the shares outstanding is usually a higher number than the float. The float is the number of shares that the public can trade. Do you think there are risks AND rewards to low float stocks? Low float stocks can be very risky to hold because they can have violent moves in either direction.
With so few shares available to trade, the impact on supply and demand can be significant. This is especially true if the company behind the stock is involved in a newsworthy event.
In addition to this, low float stocks are usually micro caps or very small caps; this adds additional risk for anyone considering holding them long term.