"Float Analysis, Powerful technical Indicators using Price and Volume"
Float analysis is a holistic approach to studying the technical behavior
of stocks. By this I mean it treats the shares actually being traded as equal in importance to price and activity. Thus, price and are seen as only two-thirds of the picture, with the number of shares actually traded being the final third that completes the picture. The power of looking at stocks this way is that it demonstrates a direct relationship between the of shares traded in the past and subsequent future movements in price. Thus, float analysis is a powerful tool to predict future stock price movements. In addition, by studying stocks holistically, float analysis expands and clarifies the definition of several technical terms. These include bottoms and tops, , and accumulation and distribution.
Float analysis also allows us to create a model of price, , and tradeable shares activity. As a model it does not claim to be the “truth” of all stock price and activity. It is, of course, just one point of view among many. But like any valid model, it has the ring of truth; and to all who listen, float analysis rings rather loudly. Its appeal as a model of stock behavior is three- fold. First, it is based on several discoveries that are easy to understand. Second, it is backed up by hard data. And third, it makes common sense.
The first and most important discovery , made in 1993, is a simple concept with profound implications. In order to understand this discovery , we need to know two key terms: float and float turnover. The float is well known to knowledgeable market players. I coined the term float turnover to explain the discovery .
Any given stock has only a certain number of shares that are actually avail- able for trading. These freely traded shares in the hands of the public are called the float, a shortened version of the floating supply of shares. For big companies, like Intel or Microsoft , the number can be over a billion shares. For a small, obscure company, it may be a few hundred thousand. But every company has a specific number of shares that is actually traded by the pub- lic. The float should not be confused with the shares outstanding, which includes both the floating supply of shares and those shares held tightly by the company’s management. The float number for any given company can change periodically; the management might issue more shares, they might sell their shares, or the shares might go through a stock split. The number of shares in a company’s float is not a secret. It is a publicly accessible from a number of sources
A Float Turnover
A float turnover is the amount of time it takes for a number of shares to trade that cumulatively corresponds with the number of shares in the stock’s float. For example, if a company’s float has 100 million shares that are actively trading and the total cumulative of shares traded over the last year was 100 million shares, then a single float turnover would be a one-year span starting from the current date and going back to the day when the cumulative total of the equaled 100 million shares. In other words, all we’ve done is add the numbers from a starting point back to a date when the total equals the float number. There is in this definition an important point that needs to be noted. Although the company’s float is 100 million shares and 100 million shares were traded in a one-year span, we cannot say that all the shares in the float have been traded. This is because it is impossible to know the intentions of all the market participants. There may be short-term day traders who buy and sell several times during a float turnover, and there may be long-term investors who are holding their shares and not trading at all. This being the case, we can only say approximately all the shares in the float were traded. We can, however, quite correctly say that the total number of shares that were traded corresponds to the number of shares in the stock’s float. This is because we can add up the number of shares that were traded during any time frame and compare it to the stock’s float number. When the number of shares traded in any time frame is the same as the float number, we can say that by our definition we have a float turnover.
To some degree, a complete change of ownership in the company is implied by a float turnover, but it can never be measured with any degree of precision.
Real Life Applications
- One can make a good strategy out of it
- Can be used as confirmations to the old school patterns observed
- Useful in deciding recovery points
- Useful in deciding reverse trade points
- Useful in deciding catastrophic Exit Plan
Some more Visual Examples
Which Timeframes it can be used
Can be used in any timeframes
like : 15s, 30s, 1m, 3m .... 1D, 1W, 1M,
Only to be used for securities for which tradingview provides data
How can you get this Indicator
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