What does the internal and external volume ratio actually indicate? The secret to mastering buying and selling momentum

Why Should You Pay Attention to the Inner and Outer Plate Ratio?

When opening trading software, the two most easily overlooked data points are “Inner Plate” and “Outer Plate.” Many investors focus daily on stock price fluctuations but fail to notice that these two indicators actually hint at the market participants’ sentiment. To succeed in short-term trading, the meaning of the inner-outer plate ratio is to determine who is actively pushing the price—are buyers eager to buy, or sellers eager to sell?

Core Logic of Inner and Outer Plates

In stock trading, there are two types of orders: buyers place “bid prices” hoping to lower the transaction price, while sellers place “ask prices” hoping to raise the transaction price. The key difference in the inner-outer plate ratio lies in who actively compromises.

When a transaction occurs at the “bid price,” it indicates the seller is willing to concede to match the buyer’s quote, and this volume is counted as Inner Plate—showing sellers are very eager. Conversely, when a transaction occurs at the “ask price,” it shows buyers are willing to pay more, and this volume is counted as Outer Plate—indicating strong buying momentum.

For example, if the bid order book shows 1160 yuan/1415 lots, and an investor directly sells 50 lots at 1160, these 50 lots are the Inner Plate; if the ask order book shows 1165 yuan/281 lots, and a buyer directly buys 30 lots at 1165, these 30 lots are the Outer Plate.

The True Face of the Five-Level Quote

The five-level quote consists of the top five bid orders (green, highest bids) and the top five ask orders (red, lowest asks). The “Bid 1” is the highest bid in the market, and “Ask 1” is the lowest ask. The difference between them is the bid-ask spread.

The key point: The five-level quote only shows pending orders, not executed trades. This is a common manipulation technique used by major players—by stacking fake orders to create a false impression.

How to Interpret the Inner and Outer Plate Ratio Values?

Calculation formula: Inner-Outer Plate Ratio = Inner Plate Volume ÷ Outer Plate Volume

• Ratio > 1: Inner Plate volume exceeds Outer Plate, indicating a strong bearish sentiment, sellers are aggressively discounting, a bearish signal.
• Ratio < 1: Inner Plate volume is less than Outer Plate, bullish sentiment dominates, buyers are chasing prices, a bullish signal.
• Ratio = 1: Balance of bulls and bears, market is in stalemate, future trend is uncertain.

Application Scenarios: How to Make Decisions Based on the Inner and Outer Plate Ratio?

Relying solely on the inner-outer plate ratio can lead to errors; it must be combined with stock price position, volume, and order book structure for comprehensive judgment:

Outer Plate > Inner Plate and Price Rising — Buyers are actively pushing the price higher, indicating healthy bullishness. Increased volume suggests a stronger short-term rally.

Inner Plate > Outer Plate and Price Falling — Sellers are actively dumping to suppress the price, indicating healthy bearishness. Increased volume suggests downward pressure intensifies.

“Fake Bullish” Trap: Outer Plate > Inner Plate but Price Not Rising and Falling, with Volatile Volume — Major players may be creating false buy orders to lure retail investors into following, while secretly distributing shares. Typical signs include sideways price movement, obvious larger outer plate, but persistent stacking of sell orders at levels 1 to 3, followed by a sudden drop in price.

“Fake Bearish” Trap: Inner Plate > Outer Plate but Price Not Falling and Rising Instead, with Volatile Volume — Major players deliberately place large buy orders to attract retail selling, secretly accumulating shares. When the price slightly rises, inner plate exceeds outer plate, but buy orders at levels 1 to 3 continue to pile up, eventually leading to a continued surge in price.

This explains why sometimes the inner plate exceeds the outer plate but the price still rises—market sentiment, news, and fundamentals also influence the market, and technical indicators are only references.

Practical Application of Support and Resistance Zones

Technical analysis focuses on the interaction between “price” and “volume.”

Support Zone forms when: the stock price drops to a certain level but “does not go lower,” indicating many investors believe the price is cheap enough to buy. These buyers expect a rebound, so it may be a good opportunity to go long.

Resistance Zone forms when: the stock price rises but encounters resistance at a certain level, often because previous buyers at that price want to exit. As selling pressure accumulates, if subsequent buying cannot absorb this selling volume, the price struggles to break through.

Practical trading strategies:

• When the price oscillates between support and resistance, traders can buy at support and sell at resistance repeatedly.
• Once the price breaks below support or above resistance, it indicates a significant change in market momentum, often leading to a one-sided trend until the next support or resistance level is reached.

The Double-Edged Sword of Inner and Outer Plate Data

Advantages:

• High immediacy: updates simultaneously with transactions, quickly reflecting market activity.
• Easy to understand: simple concepts, no complex calculations needed.
• Enhances judgment: combining order book data with volume can improve short-term trend predictions.

Disadvantages:

• Easily manipulated: major players can cycle through placing, executing, and canceling orders to create false data, leading to potential traps if relied upon alone.
• Short-term focus: only reflects current trading behavior, cannot predict long-term trends.
• Must be used with volume, technical, and fundamental analysis to avoid misjudgments.

Summary

The inner-outer plate ratio is a thermometer measuring the strength of buying and selling forces in the market. When inner plate >> outer plate, sellers are eager to exit; when inner plate << outer plate, buyers are actively chasing prices. However, stock investment involves many variables, and no single indicator can guarantee success.

The inner-outer plate ratio and support/resistance zones are just technical tools. Actual trading should also consider company fundamentals, overall economic trends, and risk management to truly improve profitability.