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What are Volume & Float?

 Volume and float are two of the most important terms you must know when trading a stock. Volume is the specific amount of shares being traded in a given day or moment. Volume is very important because it allows you the liquidity to be able to buy and sell shares when needed. Without a high volume, buy/sell orders may be executed but temporarily not filled. This means that the order will not go through until there are shares ready to be traded. 

    Float is the total number of shares of a company that are available for people to trade. Float and volume are what allow for a stock to have volatility, or the 5 amount of movement a share price undergoes. If a stock has a low float but high volume then it will have high volatility, and if a stock has high float and low volume then it will have low volatility. 

    An example of high volatility could be as such: if a stock’s float is 50 million and its volume is 5 million then that is 10% of the total stock’s shares being traded. This allows for a person to easily buy/sell shares almost instantly.

    High volume also usually is a signal of significant price movement. If a stock's relative volume, or current volume compared to average volume, is very high, then the price is most likely moving significantly in one direction. For example, if a stock's average volume is 1 million and it's current volume is 5 million, then its relative volume is 5. This is a huge relative volume and most likely means something significant happened that is drastically affecting the stock price.


    Finding a stock's volume and float is very easy and can usually be found in any list of statistics for a stock. The screenshot above was taken in the "Statistics" section of a stock on Yahoo! Finance. It provides a stock's average volumes and float. A stock's volume can usually be found through a broker or any other financial service.

    Overall, volume and float are some of the most basic yet important aspects of any stock. Without the proper volume and float, it may be very difficult to buy/sell positions and cause you to end up losing money. Be very careful to pay attention to a stock's volume before buying and assure yourself that it is possible to sell out of your position when you need to.

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