Recently, many beginners have asked me how to tell if a stock is being manipulated by major players. The simplest way is to look at the turnover rate. Honestly, many people have been trading stocks for years, but their understanding of the turnover rate is still biased. Today, I want to share my insights with everyone.

First, let's start with the basics: what is the turnover rate? Simply put, it’s the frequency of buying and selling stocks, reflecting how active the stock is. Think about it—can a stock that’s traded every day be the same as one that’s hardly traded? Of course not.

I’ve noticed that many people judge whether a stock is cheap or expensive by only looking at the current price, thinking that $7 must be cheaper than $70. That idea is too simplistic. What really matters are the price-to-earnings ratio, net profit, and the number of shareholders. For example, a stock priced at $70 with a PE ratio of only 10, versus a stock at $7 with a negative PE ratio, the $70 stock is actually the cheaper one. That’s the correct way to understand the significance of turnover.

The level of the turnover rate can reveal a lot. A turnover rate of 1%-3% indicates low popularity; institutions don’t care, and retail investors aren’t interested. Usually, these are large-cap stocks or stocks with unexciting themes. When it’s 3%-5%, some tentative positions are being built, but activity remains low. At 5%-7%, it gets interesting—both bulls and bears start to have differing views, and the stock price slowly moves upward, possibly because the main players are quietly accumulating.

When it reaches 7%-10%, the main players’ buying becomes more aggressive. If the price is falling, it might be a sign of the main players suppressing the stock to shake out weak hands, but the moves are still relatively light. At 10%-15%, the main players want to control the stock, increasing their accumulation efforts, and after gathering enough chips, they’re likely to push the price higher. Between 15%-20%, trading activity becomes more lively, and volatility increases. If this occurs at a low price level with volume, it’s a sign of potential initiation—pay close attention.

In the 20%-30% range, caution is advised. At low levels, it could mean the main players are aggressively accumulating to attract retail investors. But if volume surges at high levels and the stock declines, it’s a warning sign that the main players might be offloading. Modern main players are smart—they don’t sell large blocks all at once but break orders into smaller lots to gradually sell, reducing costs and avoiding retail investors from panicking and dumping.

A turnover rate of 30%-40% is very high, usually only seen in hot stocks with strong themes. Main players tend to accumulate quietly during such times; obvious signs can cause prices to spike prematurely, increasing their buying costs. In such cases, it might be that they’re distributing chips to the market.

When the turnover rate hits 40%-50%, attention should be heightened. The stock’s volatility is significant, and most investors can’t hold on. These stocks carry high risks, and I personally wouldn’t enter easily. Between 50%-60%, it gets even crazier—possibly due to a major news event causing huge divergence. At 60%-70%, buyers and sellers are already looking down on each other. If this occurs at the bottom, it could be a sudden big positive; if at the top, it’s the situation described earlier.

Once the turnover rate exceeds 70%-80%, it’s off the rails. The stock’s uncertainty is extremely high. If it’s falling, I advise against catching falling knives, as there may be unknown negative news, and declines tend to be persistent. At 80%-100%, almost all chips are changing hands, and market sentiment is at its peak. Such stocks should be observed from a distance; it’s better to wait until things calm down before considering an entry.

That said, my investment principle is: volume expansion at low levels worth attention; volume expansion at high levels during declines I avoid; and I never buy stocks that are falling continuously. Even if I like a stock, I wait until it stabilizes before entering from the right side. Be cautious and don’t go against the trend—that’s my respect for the market.

How to identify the main players through turnover rate? First, some stocks have very low turnover rates but their prices keep rising. This indicates that medium- to long-term institutional players are involved, making such stocks more sustainable and less risky. Second, if a stock is moving in a downward channel with extremely low turnover, it suggests no one is trading it anymore—especially if it’s a stock where the main players built positions earlier. After shaking out, this situation warrants close attention, as the stock is already at a bottom zone.

But can we generally say that higher turnover rates mean higher stock prices? The answer is no. When a stock is in the rising phase, high turnover can be a good sign. But once the stock price has risen significantly and moved far away from the cost basis of the main players, high turnover often signals distribution. The phrase “massive volume, sky-high price” reflects this.

In practice, a turnover rate below 3% is quite normal, indicating no significant capital operation. Between 3%-7%, the stock becomes relatively active and warrants attention. At 7%-10%, especially in strong stocks, high daily turnover is common, showing high activity. If a stock’s turnover exceeds 10%-15% and isn’t at a historical high or topping phase, it suggests large-scale manipulation by major players. Surpassing 15% and maintaining near intense trading zones could indicate a stock with enormous upward potential—characteristic of super-strong institutional control.

Also, keep an eye on stocks with consistently high turnover and increasing prices, as this shows deep involvement by the big players. As the stock rises, profit-taking and stop-loss selling create selling pressure. The more active and thorough the turnover, the more effectively the big players can clear out weak holders, raising the average cost of remaining shareholders and easing selling pressure on the way up.

Another common phenomenon is that after a significant rise, the turnover rate drops again, and the stock price fluctuates with the market. This often occurs in growth stocks, indicating that large chips are locked in, and the main players are working on long-term strategies. Over time, the stock may climb further.

New stocks often have very high turnover on their first day, which is normal because IPO subscriptions are paid in cash, leading to dispersed holdings. Extremely high turnover on the first day indicates active accumulation.

Multiple days of high turnover accompanied by a sharp rise in stock price, outperforming the market, can have various explanations: institutional accumulation, short-term speculative trading, or distribution by the big players. It’s necessary to analyze other factors for confirmation.

When a stock approaches a limit-up for the first time, stocks with lower turnover are usually better than those with higher turnover. This is especially important in weak or consolidating markets. Ideally, normal stocks should have turnover below 2%, and ST stocks below 1%. Never exceed 5% in any case. This limits the amount of profit-taking and selling pressure on that day, leaving more room for the next upward move.

In summary, higher turnover indicates more active trading and higher investor interest, making it a popular stock. Conversely, low turnover suggests less attention and a more obscure stock. High turnover generally means good liquidity and easier market entry and exit, but such stocks are often targets for short-term speculative funds, with higher volatility and risk.

By combining turnover rate with price trends, you can make some predictions about future stock movements. A sudden increase in turnover and volume may indicate large-scale buying, potentially pushing the stock higher. But if the stock continues to rise and turnover spikes again, it could mean profit-taking, and the stock might decline.