What Is Turnover Rate? How Much of a Company's Stock Changes Hands in a Day
The day's volume as a share of the company's shares outstanding. One to three percent is ordinary and above three is active; very large companies usually sit below one percent.
Contents (6 sections)
Turnover rate is the share of a company's stock that changed hands in a day. A turnover of 1 percent means that shares equal to one hundredth of the company were traded. It puts volume on a scale that compares across companies of different sizes.
How it is calculated
Turnover rate is the day's trading volume divided by the number of shares, times 100.
Charts differ on which share count they divide by. Many Chinese sources use the free float, the shares that can actually trade. Stock Compass divides by shares outstanding, the total number of shares issued, so its figure can be lower than the one in a mainland broker's app for a company whose large holders do not trade.
Rules of thumb
| Turnover in a day | What it usually means |
|---|---|
| Below 1% | Quiet; normal for very large companies |
| 1% to 3% | Ordinary activity |
| 3% to 7% | Active: the stock has attention |
| Above 10% | Extreme: a large part of the tradable stock changed hands in one day |
Size matters. A giant with hundreds of billions in market value rarely exceeds 1 percent; a small company can trade 5 percent on an ordinary day. Compare a stock with its own history before comparing it with others.
Turnover and the volume ratio
They answer different questions. Turnover rate asks how much of the company traded today. The volume ratio asks whether today's volume is high against this stock's own recent average. A sleepy stock can have a volume ratio of 3 and a turnover of 0.4 percent: three times its usual, and still very little.
What it does not tell you
- Who traded, or why. High turnover with a rising price and high turnover with a falling one are the same number.
- Direction. It measures activity, not buying or selling pressure.
- Liquidity in money. One percent of a large company is a great deal of money; one percent of a small one may be less than you want to trade.
In Stock Compass
The rule indicator is turnover_rate, in percent, under Volume & Money Flow. It is useful as a liquidity floor, for example turnover above 0.5 so that a rule does not pick stocks that barely trade, and as a confirmation alongside a breakout. It depends on a share count from the data source; when that is missing for a stock, the indicator has no value and a condition on it is not met. Moving average alignment plus volume uses volume as the confirming half of a buy rule.
FAQ
What is a good turnover rate?
There is no good or bad level; it describes activity. Around 1 to 3 percent a day is ordinary for many stocks, above 3 percent is active, and very large companies sit well below 1 percent. Judge it against the stock's own usual level.
Why is the turnover rate here lower than in my broker's app?
Probably the share count. Stock Compass divides volume by shares outstanding; many apps, especially for China A-shares, divide by the free float, which is smaller and gives a higher percentage.
Is high turnover bullish?
Not in itself. It means many shares changed hands. At a breakout it can confirm that the move has participation; after a long rise it can equally mark heavy selling into strength.
Definition only — not investment advice.