TL;DR Float is the portion of a company's shares actually available for the public to trade — total shares minus what insiders and other locked-up holders sit on. Small float = wild price moves.
The plain-English version
A company might have 100 million shares outstanding, but that's not what's up for grabs. Founders hold some, executives hold some, big strategic investors hold chunks they can't or won't sell. Subtract all of that locked-up stock, and what's left — the shares that actually change hands day to day — is the float.
Think of a concert with 100,000 tickets printed, where superfans permanently hold 90,000 of them. Only 10,000 tickets ever hit the resale market. The tradable supply is what sets the crazy prices, not the printed total.
Why small floats mean big moves
Price moves when demand meets limited supply. When a stock's float is tiny — a few million shares — even modest buying pressure has nowhere to spread out, so the price gaps violently. This cuts both ways: low-float stocks rocket on good days and crater on bad ones. Day traders screen specifically for low float + news + volume, because that combination produces the biggest intraday moves in the market.
Float is also the fuel gauge for squeezes: short interest is usually quoted as a percentage of float. "Short interest is 40% of float" means shorts have sold nearly half the tradable supply — kindling, meet spark.
Float vs shares outstanding — the numbers people mix up
Shares outstanding = every share that exists (used for market cap). Float = the tradable subset. A stock can have a big market cap and a skinny float — those are some of the jumpiest names around, because the valuation is set by a thin sliver of actual trading.
The common mistake
Treating low float as free money. The same physics that sends a low-float stock up 80% in a day takes it down 60% the next — and the exits are exactly as narrow on the way out. Thin supply means thin mercy.
Educational only — not investment advice. Low float amplifies everything, including regret.