A hidden 58-year-old stock god said: What does a turnover rate greater than 10%

From a Countryside Cattle Dealer to a Wall Street Monster—The Genius Speculator Enshrined in History

Wall Street, the place where money and dreams are made

Wall Street, the place filled with deceit and conspiracy

In the tumultuous century-long history of Wall Street, countless legendary masters have left their names, from Vanderbuilt to Rogers, from Livermore to Buffett...

However, among these resounding names, one person's name is hailed as "the legend among legends," "the most powerful villain in the history of Wall Street"!

He is Daniel Drew, known as the "Watered Stock Demon."

The Rise of the Watered Cattle Dealer

In 1797, a male infant was born in a barren mountain area of the eastern United States on a farm, and this was Daniel Drew. Daniel's family was very poor, so poor that they couldn't afford much education. In fact, until he became a notorious figure on Wall Street, he did not have a proper degree or diploma!

Advertisement

Yes, unlike many financial experts, Daniel Drew can almost be said to be illiterate! He only learned basic arithmetic and could perform basic reading and writing... but he was a cunning genius!As a child, Drew had to take on odd jobs everywhere to help support his family, and even at the age of 14, in order to have food, he served as a militiaman against the British army.

After growing up, Drew was engaged in the business of selling livestock, buying some cows and then fattening them up before selling them. This was the most common pattern for American farmers at that time, but Drew found that this approach was time-consuming, costly, and risky. Once the cattle got sick or died, the money would be wasted.

So Drew came up with a brilliant idea to make quick money. He bought a lot of thin cattle in the mountains, which were relatively cheap in transfer price because of their poor appearance. Then he let the cattle starve for a whole day and fed them salt continuously. The next morning, he drove the cattle to the river to drink water. The thirsty animals drank desperately, and each cow could drink several gallons of water. The weight would soar accordingly, and then Drew would transport them to New York to sell to other cattle traders and butchers.

Drew's ruthless business model allowed his capital to accumulate rapidly.

By the 1820s, the number of livestock he sold at one time had reached 2,000, and he could earn a profit of 12 dollars for each livestock sold.

With money in hand, Drew naturally began to seek more opportunities to make money, so he started to frequently enter Wall Street. In Drew's view, stock trading was obviously more efficient and fun than the smelly cattle trade!

When he first entered the market, everyone thought Drew was just a country upstart. He dressed old-fashioned, behaved rudely, and could not read a few big characters. Even when he laughed, it was like a hen about to lay an egg. But soon these people found out they were wrong. This upstart was not only as cunning as a fox, but also acted ruthlessly, even more fierce than a tiger!

Drew was extremely good at inciting market sentiment. He would often hire people to spread rumors, and at the same time, he would bribe the media to hype and speculate about a stock's imminent rise or fall.His most skillful trick is to first create rumors to incite a wave of panic, such as a certain stock about to plummet, a certain issuing company facing a major issue, and so on. Then, after the stock price plummets, he buys a large amount and finds someone to refute the rumors.

One time, he walked into the most famous gentleman's club in New York City - the Union Club. Drenched in sweat, Drew seemed to be looking for someone. After searching in vain, he took out a handkerchief to wipe his sweat and left grumbling. At this time, the stock brokers present noticed that Drew had dropped a piece of paper without realizing it. So these brokers immediately picked up the paper and saw the words: "Buy as many Oshkosh stocks as you can at any price."

According to historical records, Oshkosh was a railway company that was considered to be severely overvalued at the time, and the stock price was expected to fall immediately. However, these brokers speculated based on the note that Drew must have known some insider information about Oshkosh that they did not know. Therefore, they pooled their resources and bought 30,000 shares of Oshkosh stock (which was an astonishing amount of money at the time). Subsequently, the brokers immediately notified their major clients, and for a while, Oshkosh stocks were "hard to find" in the market, and the stock price was also driven to a new high.

But what they didn't know was that the largest shareholder of this stock was Daniel Drew, who was actually trapped by this stock and was now looking for fools to take over!

So, Drew began to sell short quickly and spread rumors to create panic! Oshkosh immediately experienced a devastating collapse, and the stock price plummeted at a rate of more than $12 per day.

Not only did he get out of the stock, but Drew also made a fortune by first buying more and then selling short!

Few and refined technical indicators

There are more than a hundred kinds of technical indicators, and those who can use them well are even fewer.

The reason is not their complexity and variability, but people's incorrect understanding of technical indicators. Many people regard technical indicators as the secret to victory and the key to success, trying to make a fortune easily with just a few indicators, and ignoring their own subjective initiative and diligent research. Such irresponsible people cannot succeed in the market of games, even if they make a profit by luck, they will sooner or later return the principal and profit to the market.

Technical indicators themselves have many problems, such as:1) Various indicators are derived from elements such as opening prices, closing prices, and trading volumes, and the research orientation is too one-sided and similar;

2) Various technical indicators are derived from already occurred prices or trading volumes, and can only reveal phenomena in a lagging form;

3) Various technical indicators belong to the category of data statistics; they can only provide statistical results and cannot reveal market trends themselves;

4) The environment and background of the development of various indicators are different, and there are many problems when they are applied to other countries and different markets;

5) Some indicators are ineffective during stock consolidation, and some are ineffective when the trend is obvious, but many people do not know this;

6) All indicators have technical blind spots, and at that time, the data they collect is meaningless for our actual operations;

7) All technical indicators require manual optimization of parameters, but after spending time, effort, and money, the effectiveness is often still unknown;

8) When using multiple technical indicators to jointly verify signals, either the consistent signals are given too late, or it is unclear which one to believe.

9) Technical indicators are often manipulated by the main force to deceive traders, causing them to make actions that are not beneficial to themselves but beneficial to the main force.

In summary, technical indicators are like the dashboard in a car's cockpit; they can only accurately display data such as speed and mileage, but they cannot tell the driver the direction of travel and road conditions. Experienced drivers often do not need to look at these data and can roughly know the current speed, fuel consumption, direction, and road conditions, and make the correct choices for the driving route and time.All technical indicators are almost the product of volume-price data + parameters + functions, all derived from the most basic price and trading volume data. Without the data of volume and price, there would be no existence of these indicators. If you can understand the relationship between the K-line chart and trading volume, what is the need for technical indicators? Technical indicators are nothing more than finding a more intuitive way to describe a certain aspect of the situation, or finding an inherent stability in the frequently changing volume-price relationship. However, for senior analysts who understand the internal and external causes of stock prices, where the stock price moves, how it moves, and how much it moves, are all within a controllable outline. Using technical indicators to remind is really superfluous.

In general, when conducting technical analysis of the stock market, using K-lines to capture short-term trends, using moving averages to grasp long-term trends, using trading volume to assist in judging the turning points of trends, using various trend lines and cutting tools to simulate future trends, using Dow theory and contrarian theory to grasp the rhythm of trends, using mobile cost distribution to analyze the situation of chips, using the relative strength index to monitor whether a stock is strong, and using sector indices to observe whether the trend has reversed, it is already enough.

Simplicity is the best; complexity is self-inflicted by the mediocre.

What is the turnover rate?

The "turnover rate," also known as the "turnover rate," refers to the frequency of stock transactions in the market within a certain period, and is one of the indicators reflecting the strength of stock liquidity. There are different types of indicators based on the nature of the sample as a whole, such as the total turnover rate of all listed stocks on the exchange, the turnover rate based on the number of shares issued by a single stock, and the turnover rate based on the holdings of a certain institution. The higher the turnover rate, the more active the trading, the more popular the participants; on the contrary, the trading is light, and there are more onlookers.

In fact, from the literal understanding, we know the general meaning of the turnover rate. However, what we must understand about stocks is not just the concept, but what a high turnover rate indicates and what a low turnover rate indicates, so that we can use the turnover rate on the plate to make analytical references for stocks.

Under normal circumstances, the daily turnover rate of most stocks is between 1% and 25% (excluding newly listed stocks). 70% of the stocks have a turnover rate below 3%, and 3% has become a dividing line.

When the turnover rate of a stock is between 3% and 7%, the stock enters a relatively active state.

When the turnover rate of a stock is between 7% and 10%, it is the emergence of a strong stock, and the stock price is highly active.

When the turnover rate of a stock is between 10% and 15%, it belongs to the closely operated stocks by institutions.When the turnover rate of a stock exceeds 15% and continues for several days, the possibility of this stock becoming a dark horse is very high.

The turnover rate ranking is an important sign of large capital entering the market. Only with the promotion of large capital entering the market can the stock price rise significantly, which is the most basic common sense.

<>

General investors, especially newcomers. When analyzing the trend of individual stocks, they are often obsessed with technical indicators or eager to hear all kinds of news, and ignore the most common, most practical, and most referential data - turnover rate. So let's take a specific look at the turnover rate.

Classification of turnover rate

We divide the turnover rate into: low turnover rate, medium turnover rate, and high turnover rate.

Low turnover rate: We can call those with a turnover rate below 3% as low turnover rate. (It is advisable to wait and see for this type of stock)

Medium turnover rate: We can call those with a turnover rate of 4% or above as medium turnover rate. (The standard for medium turnover is that the turnover is basically around 4%, and this type of stock can be paid attention to)

The standard for high turnover rate is a turnover rate above 6% (pay close attention), but a high turnover rate requires attention to risk.

Method of calculating turnover rateThe calculation formula is: Turnover Rate = (Number of Shares Traded / Number of Circulating Shares at the Time) × 100%. Depending on the different time parameters, it is further divided into daily turnover rate, weekly turnover rate, or average daily turnover rate for specific time periods, etc.

A high trading volume does not necessarily mean a high turnover rate. Large-cap stocks and high-priced stocks are prone to high trading volumes, but to judge their trading activity, the turnover rate is needed for assessment. This is the significance of turnover rate analysis.

In practical application, a turnover rate that is too high indeed requires attention. For small-cap stocks, a turnover rate above 10% is in a state of vigilance, for mid-cap stocks it is around 15%, and for large-cap stocks it is above 20%.

In practice, the combination of these two, along with the stock price trend, can very accurately determine the main force's intentions and possible strength of the rise. It is a very important tool for timely judgment of the stage buying and selling points.

We often use the standard of below 3% and call the turnover of less than 3% "no volume", this standard is widely recognized, and a stricter standard is 2%.

The size of the turnover rate and the active state (highlight)

By pulling through the Shanghai and Shenzhen individual stocks, we can see that the turnover rate of most stocks is below 3%, which is also the normal state of the stock market.

Generally, we can judge the activity of the stock according to several intervals:

① Below 1%, absolutely minimal volume.Translate the following text into English:

① 1%-2%, trading is sluggish.

② 2%-3%, trading is moderate.

For turnover rates below 3%, investors should pay attention to two situations: one is a retail market without the participation of major shareholders; the other is after a stock has experienced a significant increase, if it is in a relatively high price area and fluctuates horizontally, if there is a low turnover rate and small trading volume, it indicates that the major shareholders do not intend to sell for the time being and are preparing to reach new highs.

③ 3%-7%, trading is active. Major shareholders are also actively participating, and investors can analyze the next move of the major shareholders based on the stock's previous trend.

④ 7%-10%, highly active. Shares are rapidly changing hands, and if this occurs at a high level, the possibility of major shareholders selling is very high.

⑤ 10%-20%, extremely active. If it is not in the historical high area of the rise or in the period of seeing the medium and long-term top, it means that there is a major operation of strong shares.

⑥ Over 20%, too active. There must be something wrong with this, most of the time when the stock price is high, it is the main shareholders who are reducing their positions and selling; if the stock price is low, it is mostly the main shareholders who are collecting chips. We can also see from the following figure that in this case, most of them have a sharp decline in the market.

Turnover Rate Stock Selection MethodTurnover Rate Search Method Step One: Open the turnover rate sorting, pay attention to the turnover rate ranking list.

Turnover rate is often followed by main force capital.

The stock with the highest turnover rate of the day is the stock that the main force capital is concerned about, so

However, it should be clarified here that the main force is not a specific object, and everyone will guess what kind of creature "the big guy" is.

Upon closer inspection, it turns out that there are a large number of powerful institutions and super retail investors.Of course, in a bull market, even ordinary retail investors can form the main force of capital.

During the peak of the market in 2007, stocks sold by fund managers were directly driven up by the ant army of retail investors to several limit-up boards.

Given the current market size, it is already very difficult for an individual to manipulate the turnover rate of a single stock.

Therefore, the market as a whole is open to public trading, and everyone relies on their own abilities to make a living.

Only by looking for problems within oneself and changing oneself can one possibly become a winner in the market.

Step two: Look for hot sectors, which are the sectors that appear most in the sub-industries.For instance, in the "Chemical Raw Materials" sector, if it appears five times on one screen, the main force of capital must be paying attention to these individual stocks that day.

Step three: Add these individual stocks to your watchlist.

Step four: Based on your own trading system, retain the stocks that meet your trading system criteria.

(Just a little joke~)

Look for opportunities to build positions, decide whether to continue tracking or to buy decisively, for example, if Ya Hua Group drops by 6 points one day,

but it belongs to a popular sector with hot stocks, and you happen to have a trading system that focuses on low absorption, and the candlestick features also match, then buy a portion today, and if it continues to fall tomorrow, keep buying. Generally, stocks that are the focus of main force capital will have fluctuations.Then, in accordance with the principles of short-term operation, combined with the patterns of the overall market to do high selling and low buying, the probability of losing money is generally greatly reduced.

For example: Shandong Haihua, which has the best increase,

meets your requirements for K-line, and at the same time your trading system is to buy high, then buy high in the low points of the overall market in a day, and buy this stock in batches.

Tomorrow, sell a part near the high point, or buy a part near the low point, to do swing operation or overnight ultra-short operation.

Increase the search method, this method is actually looking for strong stocks, more suitable for high pursuit players.

Step one: Sort the increase list

Step two: Look for popular sectors and stocksStep Three: The remaining methods are the same

Add stocks that conform to the trading system to your watchlist, and buy and sell stocks according to your own trading strategy. If they meet your selling strategy, then resolutely clear the position and look for the next similar stock, operate in a cycle, and never be greedy.

The two methods mentioned above can be particularly simple, but also do not go to the hard copy, must be combined with their own trading system to operate.

Master the direction of popular plates and individual stocks, the rest is to grasp the buying and selling points and position control, a large number of practical experience will temper your trading psychology, and learning a bit of trading psychology can avoid their own groping for too long.

In short, before the next bull market comes, we must have a good reserve of our own trading system. When the bull market comes, you are the person who cuts the leek, not the person who is cut.

Turnover rate 8 tipsTranslate the following text into English:

1. A low turnover rate indicates that the opinions of the bulls and bears are basically consistent, and the stock price will generally maintain its original trend. In most cases, it is a slight decline or horizontal operation.

2. A high turnover rate indicates that there is a significant difference between the bulls and bears, but as long as the active trading situation can be maintained, the stock price will generally show an upward trend.

3. Too low or too high turnover rates are leading indicators of stock price changes. Generally speaking, after a long period of adjustment in stock prices, if the turnover rate remains at a very low level for more than a week (such as a weekly turnover rate of less than 2%), it often indicates that both bulls and bears are waiting and observing. Since the bearish forces have been basically released, the stock price has basically entered the bottom area at this time, and it is easy to see an upward trend afterward.

4. Investors should first distinguish the relative position where the high turnover rate occurs. If a stock shows a high turnover rate after a long period of depression, and the high turnover rate can be maintained for several trading days, it can generally be seen as a more obvious sign of new funds entering. At this time, the credibility of the high turnover rate is relatively good. Because it is a bottom volume increase, coupled with a sufficient turnover, the future growth space of this stock should be relatively large, and the possibility of becoming a strong stock is also very large.

5. A sudden high turnover rate and a sudden increase in trading volume at a relatively high position are generally more likely to be a precursor to a decline. This situation is often accompanied by the release of good news for individual stocks or the overall market. At this time, the chips that have made profits will take the opportunity to exit and successfully distribute. The situation of "good news is bad news" appears in this situation. Investors should be cautious about high turnover rates at high positions.

6. For stocks with a high turnover rate for a long time, in most cases, some institutions with large positions will adopt the method of self-rescue by reversing to attract followers because they cannot exit. Investors should be alert to those varieties with sufficient turnover but limited increases.7. Stocks with a long-term low turnover rate are often trapped in a long-term slump, at this time, investors should not get involved, but wait for its volume to increase and the trend to turn strong completely, then consider participating in the investment.

8. Be cautious with stocks that have a high turnover rate after a huge increase. From the historical trend, after a stock has a huge increase, when the daily turnover rate exceeds more than 10%, the probability of the stock entering a short-term adjustment is relatively large, especially when the turnover exceeds more than 7% for several consecutive trading days, investors should be more careful.

Turnover rate stock selection skills:

1. If the daily turnover rate of a stock is below 3%, it indicates that the stock is not concerned by the market, and the transaction is relatively cold, but stockholders should also pay attention to these two situations, one is the retail market without the participation of the dealer; the other is that after the stock has increased in volume, in the relatively high price area of the stock, if a low turnover rate and small volume appear, it indicates that the dealer has no intention to sell for the time being and is preparing to reach a new high.

2. If the daily turnover rate of a stock is between 3% and 7%, it indicates that the transaction of the stock is relatively active, and the dealer is also actively participating, stockholders can analyze the next move of the dealer based on the previous trend of the stock.

3. If the daily turnover rate of a stock is greater than 7%, or even exceeds 10%, it indicates that the transaction of stockholders is very active, and the chips are changing hands sharply. If it appears at a high position, the possibility of the dealer selling is very large.

For the amplification of the turnover rate or the high turnover rate, there are mainly the following three ways of analysis:

1. First, it is necessary to observe whether its turnover rate can be maintained for a long time.Because a high turnover rate over an extended period indicates a large volume of capital inflow and outflow, strong sustainability, and ample incremental funds, only such individual stocks have operability.

2. The position of high turnover rate in the K-line

Generally speaking, a high turnover rate at a high price after continuous increases should attract the attention of shareholders, as it is very likely that the main force is selling out; whereas a high turnover rate at the bottom of the stock price indicates a greater possibility of large-scale capital construction, especially when the fundamentals are improving or there are expectations of good news.

3. The capital flow of high turnover rate

A high turnover rate can indicate both capital inflow and outflow. If the stock price closes with a bearish line (the longer the body, the better), and indicators such as DDX show a significant net outflow of large orders, a high turnover rate is often the most obvious form of a large reduction in the main force's capital; and when the stock price closes with a bullish line (the longer the body, the better), and indicators such as DDX show a net inflow of large orders, a high turnover rate is often caused by the main force's one-sided purchase, and the future market is optimistic.

Practical Illustration

Starting from the low point after a wave of decline, right-click and drag the mouse as shown in the figure below, then release the mouse and select the interval statistics, we can see the interval turnover rate.

When the total turnover rate reaches 200%, the market maker will speed up the absorption of shares, raise the construction, because the low-priced chips are no longer available, which is a good opportunity for short-term intervention.When the turnover rate reaches 300%, the market makers have generally absorbed enough chips, and then the market makers will either rapidly lift the price or forcibly wash the market.

Let's take another example. This stock has fallen from a high position with reduced volume, and it started to continuously increase the volume at a low position at the framed area in the picture. By right-clicking and dragging the mouse, we can see that the turnover rate has approached 300%, indicating that the market makers have generally absorbed enough chips, and it is time to wait for the market makers to rapidly lift the price or forcibly wash the market.

After years of stock trading, relying only on 9 mind maps is worth reading 10 times.

(Note) If the mind map is not clear, you can ask for a high-definition picture, which may be compressed here.

1. Mind Map Outline

2. K-line

3. Moving Average Basics4. Tangent

5. Indicator

6. Stock Selection Method

7. Sector Rotation

8. Stock Market Statistics9. Various Scams in the Stock Market

Trading Systems

Masters reach the lonely realm, countless hardships are hard to sing.

A survivor in the trading field has summarized several trading rules that exactly meet the above-mentioned requirements. They are listed here, hoping that investors can increase their profits and stay away from pain.

Whether it is a novice or an experienced hand, they often overlook the psychological elements of successful trading. Trading is undoubtedly one of the most stressful jobs in the world, similar to fire swallowing or bomb defusing.

Trading performance sometimes resembles a roller coaster, sometimes climbing high, sometimes plummeting, always mixed with joy and sorrow. If you are not careful, the market may break down the investor's psychology and trample on the investor's soul. As long as you enter the market, this kind of experience is inevitable, but investors can learn how to deal with these situations and even learn to profit from them.

1. Rely only on yourself. When trading, never think about relying on others and achieving yourself. The person investors want to rely on may not be a successful trader at all. Of course, there are exceptions, but the chances are few. Only by believing in yourself can you do better.It is of utmost importance to never blame others for one's own failures. No matter how low one falls, one must take full responsibility for their own decisions. Only by taking responsibility can one correct mistakes and avoid repeating them.

2. Focus on long-term goals. Avoid adjusting trading methods based on short-term performance. In the short term, any trading method may shine for a while, but the long-term cumulative results could be disastrous. On the other hand, even the best trading methods may suffer losses from time to time. Therefore, judging the quality of a trading method based on short-term performance may lead to the exclusion of the best methods, ultimately resulting in losses.

3. Do not be self-centered. Being self-centered is a fatal flaw for top traders. This is a common example, and don't become a victim because of it. Self-centered traders cannot face losses. They can hardly withstand a few consecutive losses. This leads them to often assess the quality of trading methods based on very short-term performance. If the market does not immediately follow their trading trend, they rush to exit, which is a big taboo in investing.

4. Trade within your capabilities. Trading should not affect normal life. If investors are always emotionally tense, whether they make a profit or a loss, they should not enter the market, because temporary emotions can easily lead to disastrous strategies and incorrect judgments. One of the most serious mistakes investors make is to increase their positions after making a profit. This is the worst thing, because after joy, what follows is often a loss. Increasing positions before a loss will make the loss twice as fast as the profit. The trading amount should remain constant, after all, those who are steady and steady will be the ultimate winners.

5. Do not be emotional, whether you make a profit or a loss. Trading is like playing golf. Each golfer has their own strengths and weaknesses, and their scores are good and bad from time to time. When the score is good, they feel like Tiger Woods, thinking they have found the secret to playing and will no longer hit into the bunker or water. Unfortunately! Next time he finds himself in the bunker, shouting that he will never play again.

In fact, the psychology of trading is the key to making a profit in these markets. Only those investors who have a precise understanding of these rules, as well as the psychology of the market and investors, especially their own psychology, can have more opportunities to make a profit while also maintaining rationality.

Comments