The Picture Worth a Thousand Words

View Three Graphics That will Help You Understand Float Charts:

View 1 - Simplistic / Misleading View 2 - Better

View 3
The Best of All
Here's the best graphic to understand Float Charts.
Read why at the bottom of this page. Make sure you've studied View 1 and View 2 before you study this one. They build on each other. Once you've studied these three views then go our The Eight Basic Float Turnover Formations as well as our New Archive Table
of Chart Formations.

Here are the reasons why this is the best graphic of the three. This one explains how the Current Float Box is chugging along like a railroad boxcar and is laying down channel line tracks as it goes. It explains how using the Stockshare V2 Software allows us to move the box into the past so that we can see where it was at previous bottoms and tops. It shows how support in an up-trend market comes in at the 50% or lower (100%) float lines. It shows how stocks make ABC Set-ups at the 50% Float Channel Line and most importantly, it shows the four best places to buy a stock in the order of their importance. These are the blue numbers as well as the four best places to sell a stock short. These are the black numbers.

Below you'll find some basic info on these eight places to buy and sell. You can study them in depth at the Eight Formations section of our Education Center and see lots of examples at our Archive. At the very bottom of this page you'll also find some basic definitions and details about the nature of Float Charts.

The Eight Basic Float Turnover Buy & Sell Formations:

There are 4 Places to Buy a Stock and Make Money, for Going Long
(Buying Low and Selling High)
They are numbers in blue on the graphic above:
1) Buy when the price pulls back and finds support at the rising Lower Float Channel Line - (Best Place to Buy for Making Money)
2) Buy when the price pulls back and finds support at the rising 50% Float Channel Line (Better for Making Money)
3) Buy when the price breaks out above a Float Turnover in a Correction (Good for Making Money)
4) Buy when the price breaks out above a Float Turnover at a Bottom (Hard to Make Money)

For Going Short (Selling Borrowed Stock High and Buying it Back Later at a Low Price) There are 4 Places to Sell Short and Make Money:
1) Sell short when the price finds resistance at a descending top float channel line
2) Sell short when the price finds resistance at a descending 50% float channel line
3) Sell short when the price breaks down below a Float Turnover in a Retracement
4) Sell Short when the price breaks down below a Float Turnover at a top.

A stock's floating supply of shares is constantly changing hands. The time it takes for the float to turnover once, (a hypothetical change in the stock's ownership) is represented by the gray box with two red lines. This is done by simply adding volume up backwards from any point until the cumulative total equals the float number. To create the upper and lower float lines we plot the upper and lower right hand corners of the float box. A dotted 50% line is also plotted. This is done by tracking a second box which uses half the float number. This second box is left invisible; only its tracks (dotted lines) are seen. The graphic below shows how the float turnover looked at various points in its past. The current float turnover which is always on the far right is updated everyday. Look below the graphic and you'll find more info on the best ways to make money using Float Charts.

DEFINING TERMS

To understand Float Charts, four key terms must be defined: float, float turnover, float boxes, and float channel lines.

Float - the number of shares actually available for trading. When a company goes public they issue shares outstanding. The management then holds some percentage of shares and what's left over to be sold to the public is called the float or floating supply. Float Charts are all about tracking the floating supply in an attempt to find areas of accumulation and distribution on the chart due to a change in the ownership of the floating supply.

Float turnover - a term coined by Steve Woods. It refers to any time frame on the chart in which the cumulative volume equals the number of shares in the floating supply. Float turnovers are the basis of all float charts.

Float Box - float turnovers are shown on the chart as a gray rectangle with two red lines. The rectangle changes from day to day like a moving average and is known as the float turnover box or more simply the float box. Think of the float box as a 'box car' on railroad tracks, that gets recalculated and re-plotted every day. Thus the current float box is always on the far right of the current day's chart. But with Stockshare V2 software, you can move the 'box car' float box back over its tracks to see what it looked like at various points in the past.

Float Channel Lines - the upper and lower right hand corners of the float box get plotted on a day-to-day basis thereby creating float channel lines. These channel lines allow us to see the "tracks" left behind from previous float turnover boxes in the past. By creating float boxes from half or quarter of the floating supply, we get narrower channel lines within the larger 100% float box channel lines. These narrower lines, known as the 50% and 25% float channel lines show where stocks have a tendency to find support at the bottom of corrections and resistance at the top of retracements.

The Bottom Float Box shows where accumulation of the float by the smart money at the very bottom takes place.

After a bottom is put in pull backs can be seen to occur at various levels on the float turnover. The most common pull back area is the 50% float channel line. This is better place to buy stocks that at breakout points. There's less risk and a greater likelihood of buying successfully.

Another common area of support is the lower float channel line. This is the best place to find winning stocks.