There's something I've noticed many people misunderstand—that is, how to interpret turnover rate. We often hear people say that a certain stock has a very high turnover rate, but actually, few can use the turnover rate to identify main force actions.

Let's start with the basics: the turnover rate is simply the frequency of stock trading. To put it simply, if a stock trades 20 million shares in a month, and the total share capital is 100 million shares, then the monthly turnover rate is 20%. This number reflects how active the stock is and whether someone is secretly manipulating it.

But there's a trap here: many people judge whether a stock is cheap based on the current price, when actually they should look at intrinsic value. For example, a stock priced at 70 yuan with a P/E ratio of 10 times, versus a stock at 7 yuan with a negative P/E ratio— which one is cheap? Most would say 7 yuan is cheap, but in reality, 70 yuan is the better deal. To determine if a stock is worth paying attention to, you can't just look at the current price; you need to consider a comprehensive ranking of indicators like P/E ratio, net profit, number of shareholders, and net asset per share.

Back to how to interpret the turnover rate. A turnover rate below 3% is very common and usually indicates no big funds are operating behind the scenes. A rate between 3% and 7% already shows relative activity and warrants attention. A daily turnover rate of 7% to 10% is often seen in strong stocks, indicating that the price trend is particularly active and the market has started to pay attention.

What’s really interesting is the 10% to 15% range. If the stock isn't at a historical high, this kind of turnover usually means main force is heavily involved. Volume at the bottom combined with full turnover often suggests significant upside potential in the future. Conversely, if such a turnover rate appears at a high level, caution is needed—it could be that main force is gradually offloading.

Turnover rates above 15% enter high-risk territory. Over 20%, the divergence between bulls and bears is already significant. If this occurs at a low point, main force might be aggressively accumulating; if at a high point, it signals distribution. I've seen many get trapped by volume spikes at high levels.

A phenomenon worth paying attention to: if a stock has been in a long-term slump and suddenly shows a high turnover rate, and this high rate persists for several trading days, it’s basically a signal that new funds are entering. At this point, the turnover rate is more credible because there are real buyers.

On the other hand, if a stock has already risen sharply and the turnover rate drops, with the price starting to fluctuate with the market, it indicates that the chips are locked in and main force is operating long-term. Such stocks are less risky because no one is eager to dump.

In practical terms, how to use turnover rate to find main force? First, observe where the turnover rate appears. Low position with high turnover = main force is accumulating, indicating optimism; high position with high turnover = main force is distributing, be cautious. Second, see if the turnover rate can be sustained. If high turnover only lasts a day or two and then disappears, it’s just speculative funds playing around, not main force. Genuine main force operation will keep the turnover rate at a relatively high level.

Another detail: for newly listed stocks, a higher turnover rate on the first day is better. Because during IPO, the chips are very dispersed, and a high first-day turnover indicates active fundraising, making it easier for the stock to become a strong performer later.

Finally, a reminder: when looking at turnover rate, don’t rely on this indicator alone. It should be combined with price trends, market environment, and fundamentals for a comprehensive judgment. Sometimes, a high turnover rate isn’t necessarily good—it could also mean the big players are offloading. So, as always, to truly understand how to interpret turnover rate, you need to observe the market more, think more, and not be fooled by surface phenomena.