What does 'float' refer to in relation to stock shares?

The term 'float' specifically refers to the number of shares available for trading publicly in the market. This includes shares that are not held by insiders, such as company executives, directors, or employees who might have restrictions on selling their shares. The float is an important metric because it affects the liquidity of a stock. A larger float usually indicates that there are more shares available for trading, which can lead to greater price stability and lower volatility. Conversely, a smaller float can mean that there are fewer shares available, potentially leading to greater price fluctuations when trades occur. Understanding float helps traders assess how easily they can buy or sell shares without significantly impacting the stock price.