What Is Turnover Rate? – Some Lights on Its Major Applications

The people who prefer to connect with banks to get involved in the stock market might be aware of the turnover rate, which refers to how stock changes hands in the market within some specific time period. Turnover rate is the best indicator that helps to reflect the strength of the stock’s liquidity. The people who prefer to get involved in the stock market then it is a must for them to learn about the 換手率 (Turnover rate). It is a percentage of the stock trading volume of one year, which is measured as a percentage of the total number of stocks you connect with for various exchanges.

There are different types of indicators, such as the turnover rate based on the issuance of a single stock, the turnover rate of all the stocks listed on the exchange, and the turnover rate based on the Holdings’ combination of various institutions. The people who want to learn about the various turnover rate applications must stay focused and consider the following details. The information below will help you learn about the major turnover rate application you must know about as a stock investor.

Turnover Rate Application

The people who connect with the turnover rate can experience two types of situations: high and low turnover rate situations.

  1. The high turnover rate of the stock means that the trading in the stock is more active, and the willingness of people to buy stocks is higher. Therefore, the high turnover rate indicates that the stock is popular. On the contrary, the lower turnover rate indicates that the stock is less popular and belongs to unknown stocks.

  1. Another situation that occurs under high and low turnover rates is that a high turnover rate generally shows that the stock has great liquidity. It is easy to enter into the market by considering that particular stock. The higher 換手率(Turnover rate)indicates no buying or selling phenomenon, and the stock has strong liquidity. The stocks with a higher turnover rate are highly speculative, and the risk is also high.

  1. If you combine the turnover rate with the stock price, then it will help you to make certain predictions and judgments about the various future stock prices. If any sudden increase in the turnover rate of stock occurs, then it means that the investors are buying more stocks and the demand for stocks increases, then their price also increases accordingly. The stock price increases when its demand increases and lead people to suffer various troubles that are not eligible to buy stocks at a high price.

Once you complete the information, it will help you enhance your knowledge about the 換手率(Turnover rate)and its various applications. The application of turnover rate includes multiple situations related to the higher and lower turnover rate. This rate plays a significant role when people get involved in the stock market as it helps them know the popularity of the stock. With the help of turnover rate, people can buy reputed stocks with great popularity in the stock market.