Recently, I’ve seen quite a few people in the stock market asking a question: once a stock hits the limit down and is locked, can you still buy it? Honestly, this is a really good question, because at this point many beginners tend to make wrong decisions.

Let’s start with the conclusion: yes, you can buy when a stock is locked at the limit down—but the real question is: can you actually get your order filled? That’s the key.

First, let’s understand what “limit up” and “limit down” mean. Simply put, limit up is when the stock price rises to the maximum permitted limit in a single day; limit down is when it falls to the minimum permitted limit. Taking Taiwan’s stock market as an example, the daily trading limit is 10% of the previous day’s closing price. For instance, if TSMC closed at 600 NT dollars yesterday, today the highest it can go is 660, and the lowest it can fall is 540.

How do you tell whether a stock is at the limit down? It’s very simple: its price chart turns into a straight line—completely unmoving. On the trading board, limit up is marked with a red background, and limit down is marked with a green background, so you can recognize it at a glance.

Now back to the main question: can you buy when a stock is locked at the limit down? Technically speaking, you can place a buy order. But in reality, when a stock is locked at the limit down, there are tons of people who want to sell and only a few who want to buy. So if you place a buy order, it will basically get filled immediately, because the sell orders are stacked up. On the other hand, if you want to place a sell order at the limit down price, you’d need to queue up—because at that moment, nobody wants to buy.

Here’s a very practical tip. If you notice a stock might get pushed into the limit down, the smartest move is to place your sell order as soon as possible during the call auction. Why? Because the trading rule is “price priority, time priority.” The earlier you place the order, the higher your priority, and the greater your chance of getting executed. The question “can you buy when it’s locked at the limit down” should actually be flipped around—since at the limit down you likely can’t sell, prevention is far more important than trying to fix things afterward.

After your order goes through, absolutely don’t cancel it too easily. I’ve seen many people, after they realize they didn’t get sold, get anxious and cancel and re-place the order—only to end up at the very back of the queue, making it even harder to get filled. The best strategy is to place the order and keep it as is, letting time work in your favor.

If you really do get locked at the limit down, there are still a few “escape” opportunities. The first is to pay attention to the “best bid (buy 1)” order volume at the limit down price. If a large buy order suddenly appears, it’s very likely that a big player is stepping in to take over. In that case, you may consider selling alongside—but you need to move fast, because the opportunity usually lasts only a few seconds. The second opportunity is during the last 10 to 15 minutes before the market closes. At that time, liquidity often temporarily releases, and funds may come in to pick up bargains—this is also typically the last time to sell that day.

So why do stocks hit the limit down? Usually there are a few common reasons. First, bad news—such as an earnings report disaster (“earnings blow-up”), a drop in gross margin, or a company scandal. When panic selling floods in, it’s very hard to avoid. Second, the overall market sentiment can collapse—for example, during the COVID outbreak in 2020, many stocks simply lay flat and hit the limit down directly. Third, big players may start dumping (“unloading cargo”), pushing the price up after a hype-driven run and then distributing shares to trap retail investors. Finally, from a technical perspective, a breakdown below an important support level can trigger stop-loss selling.

So when you encounter a situation like “can you buy when it’s locked at the limit down,” my advice is to first figure out why it hit the limit down. If the company itself doesn’t have real problems and the drop is mainly due to market sentiment or short-term factors, it’s very likely to rebound afterward. In such a case, holding or making a small initial position might be a better option.

On the flip side, don’t get carried away by limit up either. When you see a stock hit the limit up, don’t rush to chase it. First, check whether there really is any major positive catalyst behind it—and whether that catalyst can keep the price rising. If you feel it can’t hold up, staying on the sidelines is the best choice.

Finally, here’s a practical alternative. When a stock hits the limit up due to positive news, you can consider buying related upstream and downstream companies or similar stocks. For example, if TSMC hits the limit up, other semiconductor stocks often move along with it. In addition, some Taiwanese stocks are listed in the U.S.; for example, TSMC can be bought on U.S. markets, which makes trading more convenient.