Recently, a friend asked me how to find stocks that are being manipulated by the main players. Actually, it's very simple—just look at the turnover rate. I’ve noticed that many people don’t really understand what stock turnover means, and as a result, they’ve lost a lot in the stock market. So today, I want to have a good talk about this topic.

First, let’s start with the most straightforward understanding: the turnover rate is the frequency of buying and selling stocks, reflecting how active a stock is. You can imagine, if a stock is being bought and sold crazily every day, there must be a story behind it. Conversely, if no one pays attention to a stock, it’s not very attractive.

My own experience is that understanding what the stock turnover means is most important in different turnover rate ranges. For example, a turnover rate between 1% and 3% is basically a dead fish—institutions don’t care for it, and retail investors also dislike it. When it’s between 3% and 5%, people start to tentatively enter. When it reaches 5% to 7%, both bulls and bears have differences, and the stock price begins to slowly rise. This is very likely when the main players are quietly accumulating.

What’s really interesting is the 7% to 10% range. The main players’ buying activity becomes more aggressive. If this turnover rate appears during a decline, it indicates that the main players are suppressing the stock price and shaking out weak hands, and their methods are quite gentle. When the turnover rate surges to 10% to 15%, the main players are starting to control the market, increasing their accumulation efforts, and the subsequent trend is a rally.

I previously made a mistake by not understanding high turnover rates at high prices. A turnover rate of 15% to 20% appearing at the bottom, combined with volume increase, is a sign of initiation. But if volume increases and the price drops at a high level, my current approach is to stay away and not catch falling knives. If the turnover rate is 20% to 30% at a low point, the main players might be violently accumulating; if it’s at a high point, it’s a sign of distribution.

Here’s a reminder: today’s main players have already learned to be smart. They won’t sell large blocks all at once but will break them into smaller orders to sell gradually—firstly, to lower their costs, and secondly, to prevent retail investors from panicking and dumping. So, when looking at stock turnover, don’t just focus on the size of the orders.

A turnover rate of 30% to 40% is rare. Usually, only stocks with very hot themes will show this. At this point, the main players are likely distributing, exchanging chips with the new buyers. When it reaches 40% to 50%, it’s even crazier. Such stocks carry huge risks, and most people can’t hold on. I wouldn’t touch them.

When the turnover rate hits 50% to 60%, it’s usually caused by a major news event triggering huge disagreement. Those selling at high levels are taking profits from earlier gains, while buyers are trying to catch the rebound. At 60% to 70%, it’s a level where people are insulting each other—extremely crazy. If it’s at the bottom, it might be a sudden major positive news; if at the top, it’s the situation described above.

A turnover rate of 70% to 80% has already deviated from normal, and the stock’s uncertainty is very high. My advice is: during a decline, absolutely don’t catch falling knives, because there might be negative news you don’t know about, and the downward momentum is strong. After such a high turnover, the stock can still fluctuate significantly. When it reaches 80% to 100%, it’s even more extreme—emotional frenzy to the max. These stocks should only be watched from afar, not played with. Wait until things calm down before considering entering.

Ultimately, my trading principle is: volume increases at low prices are worth paying attention to; volume decreases at high prices mean I won’t get involved; and when stocks are continuously falling, I definitely won’t catch falling knives. Respect the trend—if you need to retreat, do so. That’s respect for the market.

Also, I want to mention an important concept within the idea of stock turnover. The calculation formula for turnover rate is the trading volume over a certain period divided by the circulating shares, multiplied by 100%. For example, if a stock trades 10 million shares in a month, and the circulating shares are 20 million, the turnover rate is 50%. Different turnover rate ranges correspond to different states of the stock, and this is key to judging the actions of the main players.

A low turnover rate indicates that bulls and bears are in agreement, and the stock price generally maintains its original trend, often with slight declines or sideways movement. A high turnover rate indicates disagreement, but as long as trading remains active, the stock price generally rises. Extremely low or high turnover rates are often early indicators of a trend reversal. Especially after a long period of adjustment, a very low turnover rate (weekly turnover below 2%) often signals that both bulls and bears are waiting, and the stock has reached a bottom, making an upward move very likely.

Finally, I want to say that understanding the true meaning of stock turnover isn’t about chasing gains or avoiding losses, but about more accurately identifying the actions of the main players. Stocks with long-term main player operation tend to have very low turnover rates but keep rising in price, which carries less risk and has stronger sustainability. Conversely, stocks that are short-term speculative plays often have high turnover rates but come with greater risks. My current habit is to first look at the turnover rate to see if there’s main player involvement, then combine it with other indicators to decide whether to enter. Only then can I survive longer in the stock market.