Lesson 0.1 called float "the size of the door." This lesson measures the door precisely: where float numbers come from and why they are often wrong, what happens when volume dwarfs the float, how short sellers turn into rocket fuel, and the reverse-split trick that manufactures fake low floats on purpose.
Three share counts, one that matters
- Authorized shares: the maximum the company may ever issue. Trivia.
- Outstanding shares: everything issued, including insider and restricted stock. Used for market cap.
- Float: shares actually free to trade: outstanding minus insiders, lockups, and restricted holdings. This is the door. All runner mechanics key off float.
Float tiers and how each behaves
- Nano float (under ~1M): a rumor can halt it. Spreads are wide, fills are hard, and moves of 200-500% in a session are structurally possible. $AMIX carried a float of roughly 526K as of 2026-08-04, the day we called it at $6.30, and it ran to a $24.68 high, +292%, on 120,033,100 shares. Treat that as a snapshot, not a constant: $AMIX now reports a float of 901,837, on a share count reshaped by a 1-for-21 reverse split on 2026-06-24. The number that mattered on the day is not the number you would look up today. These names also collapse with the same violence: the door is tiny in both directions.
- Low float (1-10M): the classic runner zone. Enough liquidity to actually trade, small enough to move violently on real volume. Most of our biggest flags live here.
- Mid float (10-50M): needs a genuinely big catalyst and crowd to run hard; moves are slower and smoother, stops actually fill near their prices.
- Large float (50M+): a different sport. Runs of 20% are events; the intraday violence this course is about mostly cannot happen, there is too much supply to chew through.
Float rotation: when everyone's basis is today
Divide the day's volume by the float. When the answer passes 1.0, the float has "rotated": on paper, every tradeable share changed hands today.
→ the float rotated about 18 times in one session
Why rotation matters psychologically: on a multiple-rotation day, almost nobody holding the stock is a long-term bagholder from higher prices: the crowd's average cost basis is TODAY. There is no wall of old trapped sellers waiting overhead to punish every new high, which is part of why rotating names can keep making highs all session. High rotation plus holding above VWAP is the signature of a crowd that is winning and reloading rather than escaping. Rotation is also the honest denominator behind those "premarket volume vs float" alarms from Lesson 1.3.
And the limit of the idea: PLAG rotated its float eighteen times on August 11 and still closed at $5.81 and opened the next morning at $1.35. Rotation tells you there are no trapped sellers above you during the session. It tells you nothing about what happens after the bell.
Short interest: the borrowed-shares overhang
Short sellers borrow shares and sell them, profiting if price falls. Three numbers describe the situation:
- SI% of float: what fraction of the door is sold short. Above ~15-20% is heavy; above 30% is a powder keg.
- Borrow fee: the annualized cost to hold the short. Triple-digit rates on hot small caps mean shorts bleed money every day they are wrong: pressure that demands resolution.
- Days to cover: short interest divided by average volume: how long the exit line is if they all leave at once.
Squeeze mechanics in one paragraph: when a heavily-shorted name catches a catalyst and starts running, shorts face unlimited-loss math. Their exit is BUYING. So into an already synchronized demand flood (Lesson 1.1) you add a class of forced, price-insensitive buyers, and their panic is the steepest part of the chart. Add halt chains (next lesson) that keep freezing their exits at worse and worse prices, and you get the vertical melt-ups this niche is famous for.
The reverse-split trap (and occasional gift)
A reverse split merges shares (1-for-20: twenty $0.50 shares become one $10 share). Nothing about the business changes, but two illusions appear: the chart looks "affordable-to-respectable" again, and the float becomes mechanically tiny. Companies do this to stay listed, and a freshly reverse-split nano float is a favorite vehicle for manufactured pumps: engineered scarcity waiting for a story.
Trade them with eyes open in both directions: as a hazard, because the underlying company is usually a chronic diluter that will refill the float into any strength; and as a mechanic, because engineered scarcity is still scarcity: $SDOT, weeks after a 1-for-20 reverse split on May 27, carried a float around 744K as of the sessions it ran, and it went from a $6.18 close on June 25 to a $106.00 high on July 2, five sessions on our board. Date-stamp that one too: $SDOT now reports a float of 1,307,660, so the door that ran is not the door you would measure today. The split did not make it a good company. It made it a small door, and the door is what runs. Know which game you are in, and rent, never own (Lesson 1.1).
- Float is the only share count that trades: verify it from two sources and distrust it anyway.
- Float tiers set the physics: nano and low floats produce the violence this course studies.
- Rotation > 1x means the crowd's basis is today: no overhead bagholders, highs can keep coming.
- Heavy short interest adds forced buyers to a rally: squeezes are mechanics, not magic.
- Reverse splits manufacture fake-small doors: tradeable scarcity attached to a chronically diluting company.
Drill: measure three doors
Take three runners from this week. For each: find float from two different sources and note the disagreement; compute the day's float rotation (volume ÷ float); look up SI% of float; and check EDGAR for a reverse split or offering in the past six months. Write two sentences per name: what kind of door is this, and who is trapped where? This is the exact pre-trade context check we run on every flag.