Finally understanding the concept of turnover rate. To be honest, many people who have been trading stocks for years still feel confused.

What exactly is the turnover rate? Simply put, it’s the frequency of buying and selling stocks, reflecting how active the stock is. To understand what stock turnover means, you need to know: what does a high turnover rate represent? What does a low turnover rate indicate? This is the key to truly identifying the actions of the main players.

Let me give you an example. A stock with a monthly trading volume of 20 million shares and a circulating share capital of 20 million has a turnover rate of 100%. Another stock with a monthly trading volume of 10 million shares and a circulating share capital of 100 million has a turnover rate of only 10%. See, with the same trading volume, because of different bases, the turnover rates are completely different. That’s why looking only at trading value is meaningless; you need to look at the turnover rate.

Now, here’s the key question: what do different turnover rate ranges represent?

- 1%-3%: Basically ignored by everyone, institutions don’t care, and retail investors aren’t interested.
- 3%-5%: Some tentative positions are being built, but activity is still low.
- 5%-7%: Bulls and bears start to have differing opinions; this may be when the main players are quietly accumulating.
- 7%-10%: Main buying interest becomes more active, either accumulating or shaking out weak hands.

The really interesting zone is 10%-15%. Main players want to control the stock, increasing their accumulation efforts. Once they finish, they start pushing the price up.
- 15%-20%: Trading becomes more active, and volatility increases. If volume surges at the bottom, it could be a sign of an upcoming move; if volume surges at a high level with a decline, be cautious.

- 20%-30%: The battle between bulls and bears is intense. At low levels, main players might be aggressively accumulating; at high levels, they might be distributing.

Don’t just watch large orders. Nowadays, main players often break big orders into smaller ones to sell gradually—reducing costs and preventing retail investors from panicking and selling off.

- 30%-40% and above: Such extremely high turnover rates usually only appear in hot stocks.
- 40%-50%: Very risky—attention is extremely high, and prices can fluctuate wildly; most people can’t hold on.
- 50%-60%: Could be due to a major news event causing significant divergence—profit-takers are selling, while bottom-fishers are buying.
- 60%-70%: That’s extreme frenzy.
- 70%-80% and above: Out of normal range. Never chase after such stocks—there might be negative news you’re unaware of.
- 80%-100%: Almost all chips are changing hands, and market sentiment is at its peak. I advise everyone: such stocks should only be observed from afar, not touched.

So, how to use turnover rate to identify main players? The key is to look at where and how long the turnover rate appears.

- A high turnover rate at the bottom that persists for several trading days indicates significant new capital inflow, which is highly credible. This suggests a volume breakout at the bottom with substantial turnover, implying a relatively large upside potential.
- Conversely, sustained high turnover at high levels often indicates main players are distributing their holdings.

Another important detail: during an upward price movement, the turnover rate must stay consistently high and steady. Once it drops, it indicates that the capital supporting the rise is diminishing, and the upward momentum may weaken.

Low turnover rate also has its nuances. If a stock is in a downtrend with extremely low turnover—especially if it previously saw main players building positions—then after a shakeout, this situation warrants close attention, as it suggests the stock may be bottoming out.

One more reminder: don’t judge whether a stock is cheap or expensive solely by its current price. A stock at 70 yuan isn’t necessarily more expensive than one at 7 yuan. Key indicators include P/E ratio, net profit, number of shareholders, net asset per share, dividend payout ability, etc. Compare your holdings within the same industry and sector, rank them by these metrics, and score them comprehensively. Only then can you truly determine whether your stock is cheap or expensive.

In conclusion, volume breakout at the low end is worth paying attention to, while volume breakout at the high end is something I personally avoid. Even if I like a stock, I only buy after it stabilizes and shows signs of a firm bottom. Be cautious and don’t fight the trend—that’s respecting the market.