Market Cap Filter (MCap)

How the Market Cap filter works

The market capitalization (market cap) filter in stock trading is a tool used to filter and analyze stocks based on their total market value. Market cap is calculated by multiplying a company's current stock price by its total outstanding shares. It represents the total dollar value of a company's outstanding shares and is a crucial metric for investors assessing a company's size and value within the market.

Here's a breakdown of how the market cap filter works:

Market Cap Categories: Stocks are typically categorized into different market cap segments, including:

• Large Cap: Companies with a market cap exceeding $10 billion are considered large-cap stocks. They are often well-established companies with stable revenue streams and widespread recognition.
• Mid Cap: Companies with a market cap between $2 billion and $10 billion are classified as mid-cap stocks. They are usually established companies that may still have room for growth and expansion.
• Small Cap: Companies with a market cap between $300 million and $2 billion are classified as small-cap stocks. These companies are often younger and may have higher growth potential but also higher volatility.

Filtering Stocks: The market cap filter allows traders and investors to screen stocks based on their market cap. Users can set specific criteria to focus on stocks within a particular market cap range or exclude stocks outside their target range.

Trader tip

Investment Strategy: Market cap plays a crucial role in investment strategy. Investors may choose to allocate their portfolios across different market cap segments based on their risk tolerance, investment objectives, and market outlook.

Market Cap filter settings

Configuring the "Market Cap" filter is simple and can be done within the Window Specific Filters Tab of the Configuration Window in your Alert or Top List (Screener) window.

Here's how to set up the filter in your configuration window:

• Adjust the minimum value to 10,000,000,000 to see only stocks with a large market cap.
• Adjust the maximum value to 300,000,000 to see only stock with a small market cap.

Using the Market Cap Filter

The "Market Cap" filter can be used in various trading strategies, including:

Example

Sector Rotation: Investors may use the market cap filter to rotate their investments across different sectors based on market cap categories. For example, during economic downturns, investors may favor large-cap stocks in defensive sectors like healthcare and utilities. Conversely, during economic expansions, they may allocate more capital to small-cap and mid-cap stocks in cyclical sectors like technology and consumer discretionary.

Growth vs. Value: The market cap filter can help investors implement growth or value investing strategies. Growth investors may focus on small-cap and mid-cap stocks with high growth potential, while value investors may seek large-cap stocks that are undervalued relative to their intrinsic value. By filtering stocks based on market cap, investors can identify opportunities that align with their preferred investment style.

Key point

Portfolio Diversification: Market cap filtering can facilitate portfolio diversification by ensuring exposure to stocks across different market cap segments. Diversification helps spread risk and reduces portfolio volatility. Investors may allocate a portion of their portfolio to large-cap stocks for stability, while allocating smaller portions to mid-cap and small-cap stocks for growth potential.

Filters to combine with Market Cap

• Float filter
• Price filter
• Relative Volume filter
• Shares Outstanding filter

Categories

• Fundamentals alerts and filters
• Changes Daily alerts and filters

FAQ

Related filters

• Float Filter (Float)
• Shares Outstanding Filter (ShOut)
• Short Float Filter (SFloat)
• Days To Cover Filter (DTC)
• Short Growth Filter (ShortG)