Free float or free capital is the portion of a company’s equity available for trading on the market. This article is on a line from previous post (Sleeping Giant) of Petron Corporation, whereas price already down to almost lowest base support for years gone by. As the price rapidly went down, also the free float… so why we care for the market free float on a company then? Well, it’s important in terms of liquidity of our stocks. If the company has now only lower free float same with Petron Corporation lately (PCOR), it becomes more difficult to find a match neither a buyer nor a seller.

The risk with illiquid stock is that we may not be able to buy or sell immediately and at our preferred price. The lesser number of shares available for trading, the lesser buyer and seller can participate in the market. A small free float simply means lower numbers of shares are actually available for trading, which is more difficult to find a match. For this reason, investors more likely avoid illiquid stocks. Sometimes buyers are not able to find enough sellers, and sometimes sellers are not able to find enough buyers. Such situations usually lead to price volatility.

Shortage of shares available may push the price artificially high. A small free float means that even a small price rise in demand may push up the prices instantly, but it would also take much less pull down to affect the price to go down in the same. A dangerous situation for both buyers and sellers because once the demand ceases, the prices fall back with equal rapidity. So for those interested in buying a stock having a small free float must keep this in mind and to stay cautious.

But since we're all on stock market business, this volatility is what likely preferred than a stagnant price market. Good Luck then, and for fun... the below photo is the floating market in Bangkok, how come this seller risk there products on their boats rather than just displaying it in normal market station or place? Well, maybe they've seen a better opportunity or chances to sell their products in the river or floating boats.. my point is, a trader that takes risk might more favored by fortune.

God Bless.