## Mastering the Stock Market's Inner and Outer Plate Ratios for Quick Judgment of Buying and Selling Momentum

When trading stocks in the short term, many investors focus on the order book, but most people actually don't understand the true meaning behind the data of inner and outer plates. In fact, they are a barometer of market buying and selling forces—when the inner plate is large, sellers are eager to escape; when the outer plate is large, buyers are rushing to enter. Understanding this logic can help you anticipate market sentiment turning points one step ahead.

## The Core Difference Between Inner and Outer Plates

Before a stock transaction, buyers place buy orders and sellers place sell orders, each with their own price demands. What truly determines the inner and outer plate values is who compromises first.

When investors don't want to wait and sell directly at the bid price (the current highest bid), this transaction volume is counted as **Inner Plate**. This indicates that sellers are eager to sell at the market bid, a typical "bearish" signal.

Conversely, if investors buy directly at the ask price (the current lowest ask), the transaction volume is recorded as **Outer Plate**. This reflects buyers' willingness to pay a premium, showing a "bullish" stance.

For example, in TSMC's order book: the best bid is 1160 yuan with 1415 lots, and the best ask is 1165 yuan with 281 lots. If someone urgently sells at 1160 and completes 50 lots, those 50 are the inner plate; if someone urgently buys at 1165 and completes 30 lots, those 30 are the outer plate.

## The Five-Level Quote: The Most Common Market Data Panel

Opening a brokerage app, the five-level quote is an intuitive display of inner and outer plates. The left side shows **Buy Five Levels** (usually green), listing five highest buy orders from buy one to buy five; the right side shows **Sell Five Levels** (usually red), listing five lowest sell orders.

Each level displays the current price and corresponding lots. For example, buy one at 203.5 yuan with 971 lots indicates the highest bid in the market. Note that these five-level quotes are just pending orders and can be canceled at any time; they do not guarantee execution.

## Interpreting Inner and Outer Plate Ratios

**Inner/Outer Plate Ratio = Inner Plate Transaction Volume ÷ Outer Plate Transaction Volume**

This ratio indicates market sentiment:

**Ratio > 1**: Inner plate volume exceeds outer plate volume, sellers are more aggressive, signaling a clear bearish trend, possibly leading to a correction.

**Ratio < 1**: Outer plate volume exceeds inner plate volume, buyers are more active, indicating a bullish tendency, with stronger short-term rebound momentum.

**Ratio = 1**: Buying and selling forces are balanced, the market is in stalemate, direction is unclear, and it’s best to observe patiently.

## Practical Application: Combining Price and Volume for Judgment

Relying solely on the inner and outer plate ratio can be misleading due to dominant players; it must be combined with price trends and volume for meaningful analysis:

**Outer Plate > Inner Plate and Price Rising**: Buyers are actively pushing prices higher, a steady bullish signal. If volume also increases, the short-term rally is more sustainable.

**Inner Plate > Outer Plate and Price Falling**: Sellers are eager to unload, dragging prices down, a steady bearish signal. Increasing volume indicates strong downward momentum.

**Outer Plate > Inner Plate but Price Flat or Falling with Strange Volume**: Beware of "trap" setups by big players. They may be placing high pending sell orders (sell one to sell three) to attract retail buyers, while secretly offloading shares. Prices often drop sharply afterward.

**Inner Plate > Outer Plate but Price Rising with Unusual Volume**: Beware of "trap" setups for shorting. Big players may be placing high buy orders (buy one to buy three) to lure retail investors into selling, while accumulating shares at the bottom. Such stocks often continue to rise.

## Strategy Application in Resistance and Support Zones

Even if the inner and outer plate ratio points in a certain direction, it should be combined with key price levels for trading:

**Support Zone**: A price level where the stock cannot go lower after falling, indicating buying interest at that level. When prices reach support, it’s often a good opportunity to buy.

**Resistance Zone**: A price level that cannot be突破ed despite buying pressure, usually a zone where trapped investors want to exit. When prices hit resistance, sellers are eager to sell, increasing selling pressure.

Effective short-term strategies involve **trading within the support and resistance zones**—buying near support and selling near resistance. If the price breaks through support or resistance, it indicates enough strength to reverse the trend, often leading to a sustained move up or down until reaching the next key level.

## Pros and Cons of Inner and Outer Plate Indicators

**Advantages**

- **Real-time**: Data updates simultaneously with transactions, providing the fastest reflection of market sentiment.
- **Simple operation**: The concept is straightforward and easy to understand, suitable for beginners.
- **High accuracy when combined**: When used with order book structure and volume, it can significantly improve short-term trend prediction.

**Limitations**

- **Manipulation risk**: Large players can fake signals through placing, canceling, and executing orders, creating false inner and outer plate data. Relying solely on the ratio can lead to traps for beginners.
- **Short-term focus**: Inner and outer plates only reflect current transaction behavior and are ineffective for long-term trend analysis.
- **Potential distortion when used alone**: Must be combined with volume, technical analysis, and fundamental data to reduce misjudgment risk.

## Investment Mindset Summary

The inner and outer plate ratio essentially measures market sentiment—by observing the ebb and flow of these forces, traders can quickly gauge the urgency of buyers and sellers. A larger inner plate suggests sellers are impatient; a larger outer plate indicates buyers are eager.

However, the market never relies on a single indicator. Inner and outer plates, support and resistance, technicals—all are tools in the toolbox. True profitability requires considering a stock’s fundamentals and the overall economic cycle, analyzing from multiple angles to improve trading success.

Before trading live, it’s advisable to practice thoroughly with a demo account, using real market conditions with virtual funds to test your strategies. When you master the mindset, you can then confidently trade with real money.