Recently, I found that many investors don't understand turnover rate at all; no matter how much stock knowledge they read, it's useless. In fact, the stock turnover rate is the best way to find the main players, and this thing is truly priceless.

First, let's talk about what the turnover rate is. Simply put, it is the frequency of buying and selling stocks, reflecting how active this stock is. A turnover rate of 60% proves that this stock is being traded very actively; buyers think they are getting a bargain, and sellers feel they've made enough profit. This is the interesting part of the stock market's mutual interactions. So don't assume your decision is always correct; think about the logic of those trading in the opposite direction. Asking yourself "why" a few more times will help you become much more rational.

Stocks with high turnover rates are often heavily traded and attract attention. Stocks with small fluctuations or no momentum are ignored because they lack eyeball appeal. But high turnover also has its benefits—liquidity is excellent, you can buy or sell whenever you want, and there’s no awkward situation where you want to enter but can't.

Different turnover rate ranges correspond to different stock states. 1%-3% indicates sluggishness; institutions ignore it, retail funds dislike it, either because the market cap is too large to move or because the theme is too traditional and unexciting. 3%-5% suggests some tentative accumulation, but it's still not lively. 5%-7% shows disagreement between bulls and bears, with the turnover rate fluctuating slightly over several days, and the stock price gradually rising—possibly indicating main funds slowly accumulating.

At 7%-10%, main funds are more actively buying; if the stock is falling, they might be suppressing the price or shaking out weak hands, but the moves are relatively gentle. 10%-15% indicates main players want to control the market, increasing their accumulation efforts, preparing for a rally after accumulation. 15%-20% means trading is active, volatility increases, and if the stock is still at a low base with volume, it could be a sign of upcoming activation. But if volume increases at high levels and the price drops, caution is needed.

20%-30% signifies fierce battle between bulls and bears. At low levels, main players might be aggressively accumulating to attract retail investors; at high levels, it could be distribution. Don't just watch the large orders—today's main players have learned to split big orders into smaller ones to sell gradually, reducing friction costs and avoiding scaring retail investors into panic selling. A very high turnover rate of 30%-40% is usually seen only in hot stocks with exciting themes; main players prefer to quietly accumulate because obvious signs can inflate the price and increase buying costs. This could be main players offloading, replacing chips with new buyers.

40%-50% indicates extremely high attention, with significant price swings that most people can't hold through. Such stocks are very risky—be cautious when entering. 50%-60% might be caused by a major news event leading to big disagreements; at high prices, those selling are usually early profit-takers, while buyers are trying to catch the dip. 60%-70% is extremely crazy—both sides call each other fools. If at the bottom, it’s likely a sudden major positive news; if at the top, it’s the situation described above.

70%-80% has already deviated from normal, with extremely high uncertainty. If falling, I advise everyone not to catch falling knives, as there may be unknown negative news, and the decline tends to be very persistent. After such a high turnover rate, the subsequent trend is likely to fluctuate significantly. 80%-100% means almost all chips are being traded, with extreme emotional frenzy. These stocks should be observed from afar and not played with; wait until things calm down before entering.

Ultimately, volume increase at low levels is worth paying attention to, while volume decrease at high levels is not something I would personally intervene in, especially during continuous declines. Even if you like a stock, wait until it stabilizes before entering on the right side. Be cautious and don't go against the trend—that’s my respect for it.

The official explanation of turnover rate is "turnover ratio," which refers to the frequency of stock trading within a certain period in the market. It is the ratio of the total traded volume of a stock to its circulating shares, reflecting the stock's liquidity. The calculation is simple: turnover rate equals the trading volume during a certain period divided by the circulating shares, multiplied by 100%. For example, if a stock trades 10 million shares in a month and has a total of 100 million shares outstanding, the turnover rate is 10%. If the circulating shares are only 20 million, the same 10 million traded, then the turnover rate is as high as 50%.

For medium- and long-term main operation stocks, the turnover rate is usually very low, but the stock price keeps rising. This characteristic indicates that there is a main force behind the scenes, with strong continuity and very low risk. Conversely, if a stock is in a downward channel with extremely low turnover, meaning no one is trading, especially for stocks that had large main force positions built earlier and then experienced shakeouts, this situation warrants close attention—it indicates the stock price is already at the bottom zone.

Can we generally say that the higher the turnover rate, the higher the stock price will go? The answer is no. When the stock price is still not very high and in the rising phase, this is true. But when the stock price has risen quite high and is far from the cost basis of the main players, the situation reverses: high turnover rate becomes a sign of distribution, often called "sky volume meets sky price." During an upward trend, the stock must maintain a continuous and steady high turnover rate; once the turnover rate decreases, it indicates that the funds for high-altitude distribution are diminishing, and the upward momentum weakens.

In practice, investors analyze the actions of the main players through stock turnover rates. A turnover rate below 3% is quite normal, usually indicating no significant capital operation. Between 3%-7% suggests the stock has entered a relatively active state and should be monitored. A daily turnover rate of 7%-10% often appears in strong stocks and indicates high activity in the stock's trend. Stocks with 10%-15% turnover, unless they are at historical highs or in the middle of a long-term top, imply large-scale operation by major institutional players. If the daily turnover exceeds 15% and remains near intensive trading zones, it may indicate significant potential for future growth, characteristic of super-strong institutional stocks, with a chance to become market leaders.

Focus on stocks with sustained high turnover and increasing prices, as this shows deep involvement by the main players. Since rising prices face selling pressure from profit-taking and stop-loss positions, more active and thorough turnover can thoroughly clear out weak sellers, raising the average holding cost and reducing selling pressure during upward moves. Many stocks show a sharp increase in turnover after a big rise, followed by a decline in price with market fluctuations—common in growth stocks—indicating that large chips are already locked in, and the main players are operating long-term, with the stock likely to climb further over time.

New stocks generally have very high turnover on their first day, which is natural. The higher the first-day turnover, the better, because the stock is obtained through cash subscription, with holdings quite dispersed. Extremely high turnover on the first day indicates active accumulation. Continuous high turnover over several days, with the stock price rising significantly and outperforming the market, can have multiple interpretations: institutional accumulation, short-term speculative trading, or early offloading by big players. Further analysis with other factors is needed.

Stocks with strong momentum at the bottom with volume increase and relatively low prices are key targets. Their high turnover rate is more credible, indicating signs of new capital inflow and larger potential for future gains. The more fully the stock turns over at the bottom, the lighter the selling pressure during upward movement. When volume suddenly increases at high levels, it clearly indicates main players are distributing; however, releasing volume at high levels is not easy and usually requires positive news to facilitate smooth distribution.

Overall, higher stock turnover rates mean more active trading, higher willingness to buy, and are characteristic of hot stocks. Conversely, lower turnover rates suggest less attention and are typical of cold stocks. High turnover generally indicates good liquidity, easier market entry and exit, and stronger cashing-out ability. But note that stocks with high turnover are often targeted by short-term funds, with higher speculation, larger price swings, and greater risks. Combining turnover rate with price trends can help predict future stock movements: a sudden increase in turnover and volume may mean large-scale buying, pushing prices higher; if the turnover rate continues to rise after a period of increase, it could indicate profit-taking, and prices may fall.