Trading low float penny stocks is a common strategy among day traders looking to profit from explosive price movements. With the potential for bigger gains comes risks you need to understand before diving in.
Below I have put together a list of 20 low float small caps worth watching in 2020. I only picked companies that trade on legitimate exchanges – Nasdaq, NYSE and AMEX. Be warned though, these type of stocks are risky even for experienced trader.
|RFIL||RF Industries, Ltd||Nasdaq||8.46m||9.71m|
|LOAN||Manhattan Bridge Capital, Inc||Nasdaq||6.86m||9.65m|
|AVCT||American Virtual Cloud Technologies||Nasdaq||3.69m||7.94m|
|USEG||U.S. Energy Corp||Nasdaq||0.57m||1.36m|
|NTN||NTN Buzztime, Inc||AMEX||2.41m||2.90m|
|CHCI||Comstock Holding Companies||Nasdaq||2.16m||8.00m|
|WISA||Summit Wireless Technologies||Nasdaq||3.22m||7.71m|
|CTIB||Yunhong CTI Ltd||Nasdaq||2.09m||3.97m|
|ENT||Global Eagle Entertainment||Nasdaq||2.99m||3.72m|
|ICD||Independence Contract Drilling||NYSE||3.43m||3.75m|
|GRIL||Muscle Maker, Inc||Nasdaq||2.80m||8.12m|
|SGLB||Sigma Labs, Inc||Nasdaq||2.80m||3.09m|
|AMRH||Ameri Holdings, Inc||Nasdaq||2.75M||3.18M|
What is a low float stock?
Low float stocks are publicly traded companies that have a low number of shares outstanding, typically anything below 15 million shares is defined as a low float stock. This includes shares owned by all shareholders – CEO’s, directors and institutional investors etc. They are known as “restricted” and aren’t on offer to the public.
What are float shares?
The “float” is the number of shares freely available for the public to trade. The lack of supply is regarded as a positive by traders because it takes less volume to impact a stocks price. Typically penny stocks are highly diluted with companies having billions of shares outstanding, meaning it will take massive volume to move the price.
Penny stock are volatile assets, the low float element compounds the risk resulting in rapid price movements based on good or bad news. This is why it’s vital to perform in-depth technical and fundamental analysis to ensure you spot trends before they happen.
Two most important elements to low floats
1. High Volume
Trading volume is an important indicator to follow because there needs to be enough shares traded so you can easily enter and exit a trade. A minimum of 100,000 shares traded per day would be a good starting point. You don’t want to be left holding the bag.
2. News Catalyst
A news catalyst is the publicity that drives a penny stocks price, this is where the ability to research stocks and judge the impact of news is key. An example of a news catalyst would be a strong earnings report or a partnership with a bigger company.