Honestly, after so many years of trading stocks, I finally understand a principle: without understanding the stock turnover rate, looking at more market trends is useless. The turnover rate is the key to finding the main force's movements.

Let's start with the basics: what is the stock turnover rate? Simply put, it’s the frequency of buying and selling stocks, reflecting a stock’s activity level. Officially, it’s calculated as the trading volume over a period divided by the circulating shares, then multiplied by 100%. For example, if a stock trades 10 million shares in a month, and the circulating shares are 20 million, the turnover rate is 50%.

I’ve found that many retail investors completely ignore this indicator, but in reality, that’s the biggest source of losses. The level of the turnover rate directly determines the stock’s state and the actions of the main force. Stocks with a turnover rate below 1%-3% are basically ignored—institutions don’t care, retail funds aren’t interested, either because the large-cap stocks are too sluggish or because the themes are too old. When it hits 3%-5%, some start to test building positions, but it’s still quite quiet. The real interesting zone is 5%-7%, where bulls and bears begin to diverge. If the turnover rate stays in this range for several days with slight fluctuations, and the stock price gradually rises, it’s highly likely that the main force is quietly accumulating.

In the 7%-10% range, the main force’s buying activity becomes more proactive. If the stock is falling, it might be the main force suppressing and shaking out, but the moves are still relatively gentle. When it reaches 10%-15%, the main force’s intention to control the market becomes very clear—buying intensifies, and a rise is imminent. At 15%-20%, trading activity clearly increases, and volatility intensifies. If the stock price is still at a low level with volume increasing at the bottom, it’s probably a sign of an upcoming breakout. But if volume increases while the stock is falling from a high level, be cautious.

What I pay the most attention to is the 20%-30% range. The battle between bulls and bears is especially fierce here. If it’s at a low point, the main force might be aggressively accumulating, trying to attract retail investors to follow the buy-in. But if it’s at a high point, it’s a signal of distribution. Nowadays, the main force has become smarter—they don’t just dump large orders all at once but split big orders into smaller ones to sell gradually, reducing friction costs and preventing retail investors from panicking and selling.

A 30%-40% turnover rate is already very high, only appearing in particularly hot stocks. The main force usually prefers to accumulate quietly because obvious signs can cause the stock to be pumped up, increasing the cost of buying in. Such high turnover might be the main force offloading, replacing their chips with new investors. When it hits 40%-50%, the attention is extremely high, the stock price fluctuates wildly, and most people can’t hold on, making it very risky.

50%-60% is an extremely crazy state, with buyers and sellers cursing each other. It could be due to a major news event causing huge divergence—stock price at a high level, with profits taken by early investors, and new buyers trying to catch the rebound. When it reaches 60%-70%, I can only say it’s completely crazy. If at the bottom, it’s usually a sudden major positive news. If at the top, it’s the situation I described earlier. 70%-80% has already gone off the rails, with extremely high uncertainty. During a decline, don’t try to catch falling knives, as there could be unknown negative news, and the decline tends to have strong inertia. After such a high level of turnover, the subsequent trend is likely to be very volatile. 80%-100% should be avoided entirely—just observe from afar and wait for a calmer moment before entering.

Now, let’s talk about how to identify the main force through stock turnover rate. Stocks operated by the main force over the medium to long term often have very low turnover rates but keep rising in price. This pattern indicates genuine long-term operation by the main force, with very low risk. Conversely, if a stock is in a downward channel with extremely low turnover, and there’s little trading activity—especially if it’s a stock that was previously accumulated by the main force—after shaking out, this situation suggests the stock has bottomed out and warrants close attention.

Someone asked if a higher turnover rate always means the stock price will rise more? The answer is no. When the stock price hasn’t risen too high and is still in the upward phase, that’s correct. But once the stock price has risen significantly and is far from the main force’s cost basis, it’s the opposite. A high turnover rate then signals distribution. During an uptrend, the stock must maintain a steady, high turnover rate; once the turnover rate drops, it indicates that the funds supporting the high prices are decreasing, and the upward momentum will weaken.

In practical trading, my experience is: a turnover rate below 3% is quite normal, usually indicating no large capital operation. Between 3%-7%, the stock enters a relatively active state and is worth watching. A daily turnover rate of 7%-10% in strong stocks often appears, indicating high activity and that the stock is widely followed by the market. If a stock’s turnover rate is between 10%-15% and it’s not at a historical high or peak, it suggests a heavily manipulated stock by big players. If the daily turnover exceeds 15% and the stock can stay near intense trading zones, it may have huge upward potential—an indicator of super-strong manipulation.

I also pay special attention to stocks with consistently high turnover and increasing price and volume. This shows the main force has deeply entered, and because rising prices face selling pressure from profit-taking and stop-loss traders, more active and thorough turnover can clear out the selling pressure, raising the average cost of holders and reducing selling resistance during the ascent.

The core principle of trading is: stocks with volume at the bottom and at a relatively low price that are strong and have high turnover are the most credible, indicating new funds are entering and the future upside is relatively large. The more the turnover at the bottom, the lighter the selling pressure during the rise. Conversely, if volume suddenly surges at high levels, it’s a clear sign that the main force is distributing.

A high volume at low positions with rising prices is worth paying attention to, while high volume at high positions during a decline is something I would never get involved in, especially not trying to catch falling knives during a continuous decline. Even if I like a stock, I prefer to wait until it stabilizes and then enter from the right side. Be cautious when necessary; don’t fight the trend—that’s respecting the market.