Someone recently asked me, can you still sell when a stock hits the limit down? Actually, this is a question many novice investors encounter. Today, I’ll share my experience with everyone.

First, the conclusion: of course you can sell at the limit down, but it will be more difficult to get a deal. It’s like wanting to buy at the limit up; the market’s supply and demand determine whether you can execute the trade.

Let me briefly explain what limit up and limit down are. Limit up is when the stock price rises to the daily maximum, with Taiwanese stocks limited to a 10% increase over the previous day’s closing price. Conversely, limit down is when the stock price falls to the daily minimum, also capped at a 10% decrease. You can easily see this on the trading screen: stocks at limit up are marked with a red background, while those at limit down are green. The price movement chart will show a straight line, completely stagnant.

Now, back to the main point: can you sell at limit down? Of course you can. But you need to note that at this time, there are many sellers wanting to sell, but very few buyers. So if you place a sell order, you’ll likely have to wait in line for it to be filled. Conversely, if you place a buy order, because of the heavy selling pressure, your order will probably be filled immediately.

I’ve experienced situations where a stock hit limit down, and I was a bit panicked at the time. Later, I realized that if you see a stock about to hit limit down, the smartest move is to place a sell order during the opening auction, rather than waiting until it hits the limit down to try to escape. This is because the trading rule is “price priority, time priority”: the earlier you place your order, the higher your position in the queue, and the greater your chance of execution.

A little tip: sometimes, stocks at limit down will show a liquidity release 10 to 15 minutes before the close, meaning funds are entering to pick up bargains. This is the last chance to sell, so you need to act quickly. Another situation is if you see a large buy order suddenly appearing at the “buy one” level at the limit down price—this could be the main players taking over, and it might be a good time to consider selling.

Why do stocks hit limit down? There are usually several reasons. The most common is company issues, such as worsening financial reports, declining gross profit margins, or major events like financial fraud. Market panic can also cause a sharp drop, such as systemic risk outbreaks, where many stocks are sold to the limit down. Additionally, large institutional investors starting to offload holdings can cause limit downs, which retail investors often can’t anticipate. Technical breakdowns are another cause, such as breaking a key support level or a sudden surge in volume with a long black candle, which can trigger stop-loss selling.

At this point, I want to emphasize that the question “Can I sell at limit down?” is not just about “yes,” but more importantly, “how to sell.” Once you notice a stock might hit the limit down, you should quickly place a sell order during the opening auction. After placing the order, don’t cancel it lightly, because many people see their orders not filled and rush to cancel and re-enter, which can push your order to the back of the queue, making it even harder to execute. The best strategy is to keep the order as is and wait patiently.

In contrast, the U.S. stock market doesn’t have limit up or limit down restrictions. They use a circuit breaker system: when a stock’s price moves too violently, trading is automatically paused for a period to cool down the market. If the S&P 500 drops more than 7%, trading halts for 15 minutes; a 13% drop also results in a 15-minute pause; a 20% decline on the day causes the market to close early. Individual stocks also have circuit breakers: if their price moves more than 5% within a short period, trading is temporarily halted.

When encountering limit up or limit down, investors should focus on rational judgment, avoiding blindly chasing gains or panic selling. If a stock hits the limit down but the company has no fundamental problems—only market sentiment dragging it down—it’s likely to rebound later. In such cases, holding or adding a small position can be considered. When a stock hits the limit up, don’t rush to buy immediately; first, verify if there are solid reasons supporting the rise. If the upward momentum can’t sustain, it’s best to stay on the sidelines.

Another approach is, when a stock rises to the limit up due to positive news, you can consider buying related stocks in its upstream or downstream industries, or similar sectors. For example, if TSMC hits the limit up, other semiconductor stocks often move in tandem. Some Taiwanese stocks are also listed in the U.S., like TSMC (TSM), which can be bought on U.S. exchanges through foreign brokers or overseas trading accounts. Learning to operate flexibly across different markets and related stocks is key to smartly handling limit up and limit down situations.