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.
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