Explanation of a Float Lock Downhttp://investorshu
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Explanation of a Float Lock Down
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"...When we talk about the float we are talking about shares that are freely traded on the stock market for a particular stock. The float is the outstanding shares minus any shares that are not available because they are restricted or are being set aside for company purposes.
When we buy and hold stock we are taking shares out of the market and in that process reducing the float or any available shares that may be sold. When we have effectively bought all of the available shares then the stock is in “Float Lock Down” as Monk states in his posts.
Any shares purchased after the Float Lock Down point is reached are shares the market makers do not have so they are either shares that are sold short or they are naked short shares, shares that do not exist. When this event occurs then the market makers job is to try and free up shares or take the market on that stock to a higher level in order to create sales of shares. If the market makers try to free up shares then they will do what we call a “shake”. They will take the stock up then short it down in order to create panic or take out stop loss orders and/or take out those individuals who have mental stops in mind. If people do not sell and hold stock for a higher valuation then the market makers will determine after a period of time to take the stock back up and try to encourage more selling. The market is based on supply and demand. If the demand outweighs the supply then the market makers try to create an atmosphere for the seller. If there are no sellers then they take the stock to a point where people will sell. And that my friends is where it gets exciting..."