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How to understand turnover ratio

"Turnover rate", also known as "turnover rate", refers to the frequency of stocks changing hands in the market within a certain period of time, and reflectsthe strength of stock liquidity.

Turnover rate = trading volume in a certain period of time / number of outstanding shares × 100%

Combining the turnover rate with the stock price trend of individual stocks can make certain predictions and judgments about future stock prices:

1. The higher the turnover rate of a stock, it means that the stock is more active and it is a popular stock. Individual stocks with a high turnover rate are often the target of short-term funds chasing. The stock price is flexible but the risk is relatively high.

2. With the exception of some highly concentrated stocks, a lower turnover rate indicates less interest in the stock and the stock usually moves more stagnant.

3. When the price of a stock has been rising for several days and there is a sharp increase in volume, but the stock price is not rising enough, or even when the positive side is falling, it indicates that the stock is shaking at a high level and the volume is enlarged, it indicates that there is an outflow of institutional funds.

4. After a sharp rise in the share price, if the share price rises and the volume gradually decreases, the share price is just relying on people's confidence, indicating that funds are being withdrawn from the stock.

5. When the share price is at a low level, the exchange rate of 4-5% on the day should cause investors to be concerned, and on the way up, when the exchange rate exceeds 10-15%, investors should be vigilant.

This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors.  It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.