Recently, I found that many retail investors simply don't understand stock turnover rate, no wonder they lose money trading stocks. Actually, turnover rate is the frequency of buying and selling stocks, reflecting the level of activity. Let me share with everyone that this thing is really the best way to find the main players.

First, let's talk about a phenomenon: stocks with a turnover rate as high as 60% indicate that the chips are being fully exchanged. Buyers think they've found a treasure, while sellers have already made a 50% profit and want to cash out. Both sides believe they are right, but in reality, no one knows what will happen next. This is why the stock market is so interesting—there are always people doing opposite trades.

My personal experience is not to trust your judgment too much. Think more about the reasons why those doing the opposite of you are acting that way; listening to only one side is dark, listening to both sides is bright. Ask yourself why several times, and you'll be much more rational.

Now, let's talk about the specific meaning of stock turnover rate. The official definition is "turnover rate," which refers to the frequency of stock trading within a certain period in the market. The calculation formula is simple: turnover rate = trading volume / circulating shares × 100%. For example, if a stock's monthly trading volume is 10 million shares, and the circulating shares are 20 million, then the turnover rate is 50%.

Different turnover rates correspond to different stock states, which is very important:

1%-3% — In this range, stocks are basically ignored; institutions don't watch, and retail funds don't like them. Usually large-cap stocks or those without enough themes.
3%-5% — Start to have some tentative positions, but still not active.
5%-7% — Bulls and bears begin to diverge, and the stock price slowly moves upward, possibly because the main force is gradually accumulating shares.
7%-10% — Main buyers are more aggressive; if the price drops, it’s a shakeout.

10%-15% — I pay more attention to this range; a clear signal that the main force wants to control the market, with increased share absorption.
15%-20% — Trading becomes active; if volume surges at a low point, it’s a sign of initiation; if volume surges at a high point, be alert.

20%-30% — The battle between bulls and bears is very fierce.
At low levels, the main force might be aggressively absorbing shares; at high levels, it’s time to watch out for distribution.
Nowadays, the main players have learned to split large orders into smaller ones to sell gradually, reducing costs and preventing retail investors from dumping the stock.

Extremely high turnover rates of 30%-40% usually only appear in hot stocks.
But there’s a paradox: main forces prefer to quietly accumulate because obvious traces can lead to price surges, increasing their purchase costs.
So, high turnover can also be a sign of distribution by the main force.

40%-50% — Very high attention, with significant price fluctuations. Most people can’t hold on, and the risk is very high.
60%-70% — I would say this is already extremely crazy.
70%-80% — Out of the normal range, with huge uncertainty in stock price.
If it’s falling, I advise you not to catch falling knives, as there may be unknown negative news.
80%-100% — Almost all chips are being exchanged, and market sentiment is at its extreme.
My suggestion is, such stocks should only be observed from afar, not played with; wait until things calm down.

In practical trading, my experience is that volume surges at low points are worth paying attention to, while volume surges at high points I wouldn’t get involved in, especially not during continuous declines.
Even if you like a stock, you should only enter after it stabilizes from the right side.
Be cautious when necessary; don’t go against the trend—that’s respecting it.

Another key point is to distinguish where the turnover rate appears.
If a stock, after a long period of stagnation, suddenly shows a high turnover rate and maintains it for several trading days, it indicates a clear sign of new funds entering.
Volume at the bottom combined with full turnover suggests a relatively large upside potential, making it more likely to become a strong stock.

Stocks operated by main forces for the medium to long term often have very low turnover rates but keep rising in price.
This pattern indicates long-term main force operation, with strong persistence and very low risk.
Conversely, if a stock is in a downward channel with extremely low turnover, especially if the main force built positions earlier, and then experienced shakeouts, this situation warrants close attention—it suggests the stock price is already at the bottom.

But can we say that the higher the turnover rate, the higher the stock price will go?
The answer is no.
This holds true when the stock price is still in an upward phase, but when the stock price has risen very high and is far from the main force’s cost line, a high turnover rate actually signals distribution.
We often say "sky-high volume, sky-high price," which refers to this situation.

To summarize practical points:
Below 3% turnover rate is very common, with no large capital operation;
3%-7% is already a relatively active state and worth noting;
7%-10% daily turnover rate often appears in strong stocks, indicating highly active price movements;
10%-15%, if not at historical highs, indicates strong institutional operation;
Over 15% daily turnover, if maintained near dense trading zones, may imply huge upward potential and is a feature of super-strong institutional stocks.

Also, pay attention to stocks with consistently high turnover and increasing price and volume, indicating deep involvement by the main force.
While rising prices face profit-taking and stop-loss selling pressure, more active and full turnover can thoroughly wash out these selling pressures, raising the average holding cost and significantly reducing selling pressure during upward moves.

New stocks on their first day of listing usually have very high turnover rates, the higher the better.
Because during IPO, stocks are quite dispersed, and extremely high turnover on the first day indicates aggressive fundraising.

Finally, when a stock is about to hit its first limit-up, stocks with lower turnover rates are usually better than those with higher ones.
This is especially important in weak or consolidating markets.
Ideally, for common stocks, turnover should be below 2%, and for ST stocks below 1%.
These limits essentially restrict the amount of profit-taking and selling pressure on that day.
Less profit-taking and selling pressure mean more room for the stock to rise the next day.

In the end, the high or low of stock turnover rate often indicates several situations:
The higher the turnover rate, the more active the trading, the higher the buying interest, and the more popular the stock;
Conversely, the lower the turnover rate, the more obscure the stock.
High turnover generally means good liquidity, easy entry and exit, but also indicates that short-term funds are abundant, speculative, with large price swings and higher risks.
By combining turnover rate with stock price trends, you can make some predictions about future prices.
If a stock’s turnover rate suddenly rises and volume increases, it may mean large-scale buying, and the stock price could rise accordingly.
But if after a continuous rise, the turnover rate quickly increases again, it might be profit-taking, and the stock could fall.

In emerging markets, turnover rates are generally higher than in mature markets, mainly because emerging markets expand rapidly, have many new listings, and investors’ investment concepts are less mature, making trading more active.