Market Capitalization
The total market value of a company’s shares — share price times shares outstanding.
Also called: market cap · mcap
In plain language
Market cap is what the market currently says the whole company is worth. It is the only meaningful measure of a company’s size from a trading perspective.
Companies are loosely grouped by it: large cap above roughly $10 billion, mid cap between $2 and $10 billion, small cap below $2 billion, and micro cap beneath that.
Size correlates strongly with liquidity and volatility. Small caps move further and faster on less volume, and their spreads are wider.
The formula
Market Capitalization
Share Price × Shares Outstanding
Why it matters
Market cap is a fast proxy for how much volatility and slippage to expect, which feeds directly into stop width and position size.
Common mistakes
- Comparing companies by share price instead of market cap.
- Using large-cap position sizing and stop widths on micro-cap stocks.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A unit of ownership in a company.
The number of shares actually available for public trading.
How easily an asset can be bought or sold without moving its price.
How much and how quickly an asset’s price moves over a given period.
A company’s share price divided by its earnings per share.