Actually, many investors have been trading for years but still don't understand turnover rate. Today, I want to share the insights I've accumulated from watching the market over the years.

Honestly, understanding the meaning behind the main players' turnover is more valuable than any technical indicator. The turnover rate is the frequency of stock trading, reflecting how active a stock is. But why should we pay attention to it? Because it's the most direct way to find the main players.

First, let me explain how the turnover rate is calculated. The formula is simple: the trading volume over a certain period divided by the circulating shares, then multiplied by 100%, which gives the turnover rate. For example, if a stock trades 10 million shares in a month, and the circulating shares are 20 million, then the turnover rate is 50%.

Now, let's talk about what different turnover rates represent. Between 1% and 3%, basically no one cares—institutions ignore it, retail funds dislike it, either because the market cap is too large to move or because the theme is too old. Between 3% and 5%, some start tentative positions, but activity remains low. From 5% to 7%, the bulls and bears begin to diverge; the stock price slowly moves upward, likely because the main players are quietly accumulating.

At 7% to 10%, the main players' buying activity becomes more aggressive. If the price is falling at this point, it's probably the main players suppressing and shaking out weak hands. Between 10% and 15%, the main players want to control the market, increasing their accumulation efforts. Once they've accumulated enough, a rally is imminent. From 15% to 20%, trading becomes active, volatility increases, and if the stock is still at a low level with volume expanding at the bottom, it signals a potential start. But if there's volume expansion at a high level with a decline, caution is needed.

At 20% to 30%, the battle between bulls and bears intensifies. At low levels, the main players might be aggressively accumulating to attract retail investors; at high levels, they could be distributing. Don't just look at large orders—today's main players have learned to split big orders into smaller ones to sell gradually, reducing friction costs and avoiding retail investors from panicking and dumping. Between 30% and 40%, such high turnover usually appears only in hot stocks with strong themes; main players prefer to quietly accumulate, as obvious signs can lead to price inflation. This level might indicate the main players are distributing, exchanging chips with the next round of buyers.

From 40% to 50%, attention skyrockets, and the stock price swings wildly. Most people can't hold on, and the risk is high—I usually avoid these. Between 50% and 60%, a major news event might have triggered huge disagreements; at high levels, those selling are taking profits, while buyers are looking for bargains. From 60% to 70%, it's madness—buyers and sellers are cursing each other. Between 70% and 80%, the situation is no longer normal, with extreme uncertainty; if the price drops, don't catch falling knives, as there could be unknown negative news. From 80% to 100%, almost all chips are changing hands, emotions are at their peak—my advice is to observe these stocks from afar and never play with them.

The key is how to use the turnover rate to identify the main players. If a stock has a low turnover rate but the price keeps rising, it indicates that medium- to long-term main players are operating, making the stock more sustainable and less risky. Conversely, if a stock is in a downward channel with extremely low turnover, with little buying or selling—especially if the main players built positions earlier—after shaking out, this suggests the stock has bottomed out and needs close attention.

But does a higher turnover rate mean the stock will rise more? Not necessarily. When the stock is still in the rising phase, this is true. But if the stock has already risen significantly and is far from the main players' cost basis, a high turnover rate can be a sign of distribution. This is the principle behind "massive volume meeting sky-high prices."

From my practical experience, I summarize that a turnover rate below 3% is quite normal, with no large capital operation. Between 3% and 7%, the stock enters a relatively active phase and is worth noting. Daily turnover between 7% and 10% is common in strong stocks, indicating active price movement and market attention. If daily turnover exceeds 10% to 15% and isn't at a historical high or a mid- to long-term top, it suggests that strong institutional players are operating heavily, and a significant pullback might be a good entry point. Over 15%, if maintained near dense trading zones, indicates huge upward potential and is a hallmark of super-strong institutional stocks, with a chance to become market dark horses.

I also pay special attention to stocks with consistently high turnover, rising prices, and increasing volume. This shows that the main players are deeply involved, and although profit-taking and short-covering sell pressure exist, the more active the turnover, the more thoroughly the selling pressure is washed out. The average cost of holders rises, and upward selling pressure is greatly reduced.

Another phenomenon is that after a sharp rise, the turnover rate drops back, and the stock price fluctuates with the market. This usually occurs in growth stocks, indicating that a large amount of chips has been locked in, and the main players are operating long-term, so the stock will likely continue upward.

My investment principle is simple: volume expansion at low levels is worth watching; volume expansion at high levels during a decline means I personally won't intervene, especially not catching falling knives during continuous drops. Even if I like a stock, I wait until it stabilizes and then buy on the right side of the trend. Don't fight the trend—that's my respect for the market.