Hey lol -- okay let me correct one thing before we go on-- liquidity in reference to the Float. I mistakenly asserted OS...
so I'll assume for the sake of discussion you really do not understand the liquidity concept in relation to thinly traded stocks as opposed to those with very large floats?
Let's say you had $10,000 invested in both JBI and MSFT.
Rounding off, that would give you 11,494 shares of JBI and 357 shares of Microsoft (based on today's close). Liquidity at the core works within the context of 2 dynamics:
--dollars traded per day
--average daily volume
MSFT exchanged $1,751,282,667 (based on today's average price) on 62,800,000 shares traded
JBII exchanged $ 84,057 (based on today's average price) on 99,280 shares traded
So if you wanted to sell your shares in both, with the MSFT shares you'd have no problem; but the JBI shares would be problematic because... the pivotal dynamic becomes supply/demand.
Selling 357 shares into a Float of over 7 billion that trades on average over 1% of the float on a daily basis (using 8 period moving average), they would be gone in a blip as there is nothing to truly put a dent in the supply/demand balance (as it would represent 0.000443% of the avg daily volume).
On the other hand, selling 11,494 shares of JBI becomes challenging given you would be "flooding" the supply side (as it would represent 13.283254% of the avg daily volume). What is known as the "dump" truly is the result of supply side onslaught. In a thinly traded (illiquid) stock it does not necessarily have to be an onslaught-- just large in relation to the normal trading volume.
Which then brings one to the Float itself and its "health" in the eyes of a trader. The 1% figure is premised upon the theory that a healthy float turns over roughly once every 4 months. That means there is enough movement (churning if you will) of supply and demand to make it relatively easy to buy and sell. It also allows for a smoother "volatility."
Going back to JBI, the benefit JBI got for its illiquid state at onset was that the buy pressure enabled the stock to be pushed further quicker given supply side was limited (advertised as "low floater") against a larger demand side. On the other side of the coin, now you have: a supply imbalance (unrestricted shares), the float is no longer "low" but the volume is still thin-- thus illiquid.
MSFT Float Turnover Ratio (TOR): 1.07%
JBII Float Turnover Ratio (TOR): 0.26%
Hope this helps :-)
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