Market Capitalization
Definition of Market Capitalization
What is market capitalization?
Market capitalization is the monetary amount that a publicly traded company is worth, as determined by the value of the company’s outstanding shares. The market capitalization is calculated by the value of one company share times the number of outstanding shares (shares held by stockholders). For example, a company that has 3 million outstanding shares that are valued at $45 per share, will have a market capitalization of $105 million dollars.
How does market capitalization affect forex traders?
| Company ranking | Market capitalization | Risk vs. Potential returns |
| Large capitalization companies | $10 billion or more | Lower risk, lower potential returns |
| Mid-capitalization companies | $2 billion – $10 billion | Moderate risk, moderate potential returns |
| Small capitalization companies | $300 million – $2 billion | Higher risk, higher potential returns |
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