Using turnover rate to select stocks in the stock market is a common way of stock selection. Turnover rate refers to the frequency of stock transactions in the market within a certain period of time, and is one of the indicators reflecting stock liquidity. Below is the specific analysis and operation process of stock selection based on turnover rate.

The so-called turnover rate refers to the ratio between the cumulative trading volume and the tradable volume of a security within a unit of time. The larger the value, the more active the trading is, and the more sufficient the turnover between traders is. It is an important buying and selling reference in the market, and it should be said that it is far more reliable than technical indicators and technical graphics.

1. The significance of turnover rate

Turnover rate determines the level of activity of a stock. The higher the turnover rate, the more people are paying attention to the market and the stock is more active, which is worth paying attention to.

2. Classification of turnover rate

We divide turnover rates into low turnover rate, medium turnover rate, and high turnover rate.

Low turnover rate: We can refer to any turnover rate below 3% as low turnover rate. (It is advisable to wait and see for this type of individual stock)

Medium turnover rate: We can refer to a turnover rate of 4% or more as medium turnover rate. The standard for medium turnover is that turnover is generally around 4%, and this type of stock can be monitored

The standard for a high turnover rate is a turnover rate of more than 6% (key focus).

However, if the turnover rate is too high, attention should be paid to the risks.

The different positions where high turnover rates occur determine the direction of the stock in the later stage. That is to say, whether the stock will fall or rise in the future market. Let's share the third point below.

5 methods for stock selection based on turnover rate

1. Trend is king, buy in batches: for example, in a bull market, short positions disappear, and a brief pullback is a new opportunity to build positions. Buy in batches and gradually build positions. The major trends of different sectors will drive the trend ups and downs of individual stocks within the sector. At this point, the turnover rate will only be an auxiliary function.

2. High turnover rate at low levels and market manipulation: A very high turnover rate at low levels does not necessarily mean that the main players are buying, especially when the stock price is still in a downward trend, which is often a sign of continued distribution.

3. Breaking through the average turnover rate by more than twice: When a stock's turnover rate exceeds 10% on the same day during a rally (excluding new stocks or stocks that have just been listed), it usually indicates that the main force has started to move during the trading session.

4. Pay attention to unreasonable pullbacks, and the main force lowers to attract funds: Low position main forces usually do not get much chips, so retail investors are most easily fooled by a stock's pullback after breaking through a long-term downward trend. The stock price is not positive, the turnover rate is low, and when retail investors sell, the main force takes all orders. At this stage, the turnover rate is much smaller than when it rises, but the main force can get a lot of chips.

5. Bottom volume increase and high turnover rate: Stocks with bottom volume increase have a high turnover rate, indicating clear signs of new capital intervention and relatively large potential for future growth. The more sufficient the bottom volume change, the lighter the selling pressure in the upward trend.