<h2>What is Market Capitalization?</h2>
<p>Market capitalization, often abbreviated as <strong>market cap</strong>, is a metric that measures the total value of a publicly traded company. It's calculated by multiplying the company's current stock price by the number of outstanding shares. In essence, it represents the market's valuation of a company.</p>

<h2>How It Works</h2>
<p>Market capitalization is calculated using the following formula:</p>
<table>
<tbody>
<tr>
<td><strong>Market Capitalization</strong></td>
<td>=</td>
<td><strong>Current Stock Price</strong></td>
<td>×</td>
<td><strong>Number of Outstanding Shares</strong></td>
</tr>
</tbody>
</table>
<p>For example, if a company's stock is trading at $100 per share and there are 1 million shares outstanding, the company's market capitalization would be:</p>
<p><strong>$100</strong> × <strong>1,000,000</strong> = <strong>$100,000,000</strong></p>

<h2>Why It Matters for Traders</h2>
<ul>
<li><strong>Company Size Comparison</strong>: Market cap helps traders compare the size of companies. It's a quick way to understand if a company is a small-cap, mid-cap, or large-cap stock.</li>
<li><strong>Valuation Tool</strong>: Market cap is a key component in many valuation ratios, such as the price-to-earnings ratio (P/E ratio). It helps traders determine if a stock is overvalued or undervalued.</li>
<li><strong>Index Composition</strong>: Market cap is used to weight indices. Larger companies typically have a bigger influence on the performance of market indices.</li>
</ul>

<h2>Example</h2>
<p>Let's say you're trading on the STB Provider platform using MetaTrader 5 and you're interested in Apple Inc. As of writing, Apple's stock price is around $150, and there are approximately 16.5 billion shares outstanding. So, Apple's market capitalization would be:</p>
<p><strong>$150</strong> × <strong>16,500,000,000</strong> = <strong>$2,475,000,000,000</strong></p>

<h2>Key Takeaways</h2>
<ul>
<li>Market capitalization is a company's total market value calculated by multiplying the stock price by the number of outstanding shares.</li>
<li>It helps traders compare company sizes, perform valuations, and understand index composition.</li>
<li>Market cap is a crucial metric for both fundamental and technical analysis.</li>
</ul>