Cap is short for capitalisation which is a measure by which we can classify a company’s size. Big/large caps are companies which have a market cap between 10-200 billion dollars. Mid caps range from 2 billion to 10 billion dollars.
These might not be industry leaders but are well on their way to becoming one. Small caps are typically new or relatively young companies and have a market cap between 300 million to 2 billion dollars.
Although their track record won’t be as lengthy as that of the mid to mega caps, small caps do present the possibility of greater capital appreciation, but at the cost of greater risk.