"Limit Up Board Meaning" Lazy Guide: How to buy and sell when the stock price is stuck?

The two most heartbeat-raising words in the stock market are probably “limit up” and “limit down.” Especially when you’re holding a stock that suddenly hits the limit up, the thrill of it; or watching your stock hit the limit down and feeling helpless about selling. These are the real scenes of stock investing. Simply put, limit up and limit down are extreme fluctuations in stock prices, representing a one-sided surge in buy or sell orders. “Limit up” means the stock price has reached the maximum allowed for the day and cannot go higher. So when a limit up or limit down occurs, can we still buy or sell?

What are limit up and limit down? One chart to understand instantly

Have you ever seen a stock’s price chart suddenly turn into a straight line? Like frozen in place, not moving at all? That’s what limit up or limit down looks like.

“Limit up” means the stock price has hit the maximum allowed for the day, like hitting a ceiling that the price can’t break through. On the Taiwan stock market, these stocks are marked with a red background, easy to spot. Conversely, “limit down” means the stock price has fallen to the daily minimum, like hitting the floor, and can’t go lower. These stocks are marked with a green background.

In Taiwan’s stock market, regulators specify that the daily price change limit for listed and OTC stocks cannot exceed 10% of the previous day’s closing price. For example, if TSMC closed at NT$600 yesterday, the maximum limit up today is NT$660, and the limit down is NT$540. Once the price hits these limits, supply and demand become extremely unbalanced—buyers line up eager to buy, while sellers rush to exit.

At limit up, you’ll see buy orders filling the side with many orders, some even queued beyond the limit price, but the sell side is empty. This is because no one wants to sell at that price. But at limit down, the situation is reversed—sell orders flood in like a flood, while buy orders are scarce, as everyone is trying to sell and no one wants to buy.

Can you buy or sell when a limit up or limit down occurs? The real issue is execution

This is a common confusion for many new investors: when a stock hits the limit up, can I still place a buy or sell order?

The answer is: Yes, of course. Limit up does not freeze trading functions; you can still place orders normally. But the key is—will your order be executed?

Suppose a stock has already hit the limit up. You want to buy now. You can place a buy order, but be prepared to wait in line at the limit price, because many others are already queued there. The chance of execution depends on whether someone is willing to sell at the limit price, which is usually not easy to happen.

Conversely, if you want to sell at this moment? The situation is quite different. Due to continuous buy orders at the limit up, your sell order will almost immediately be filled. At this point, only you want to sell, but many want to buy, giving the seller the advantage.

This explains why some say “You can sell but not buy at limit up”—not because rules prevent buying, but because in practice, it’s hard to buy.

Should you rush to sell at limit down? First, understand these points

Limit down and limit up are symmetrical in trading rules, but the psychological feelings are completely opposite.

When a stock hits the limit down, you can still place buy or sell orders. But this time, the initiative lies with the buyers. If you place a buy order, it’s likely to be executed immediately because there are many sellers. Every holder is thinking about escaping the sinking market, and buy orders are snapped up instantly.

But if you want to place a sell order at the limit down price, you’ll need patience. Because many want to sell, and sell orders have piled up, you’ll have to wait until earlier orders are filled before it’s your turn.

A special reminder: Don’t let emotions take over when you see a stock hit the limit down. Many investors panic and sell immediately, only to realize later they’ve taken a big loss. Before deciding to exit, calmly consider: Why did this stock hit the limit down? Is there a fundamental problem with the company, or is it just market sentiment?

For example, some stocks fall limit down due to overall market panic, but their fundamentals are actually fine. During the COVID-19 outbreak in 2020, many fundamentally sound companies’ stocks also hit the limit down. In such cases, savvy investors often choose to hold or even buy more, knowing it’s a short-term overreaction.

Why do stock prices surge or plummet wildly? 5 main reasons revealed

The drivers behind limit up

First: Explosive positive news. When a company releases better-than-expected earnings, such as quarterly revenue soaring or EPS skyrocketing, or suddenly secures major orders (like TSMC winning big contracts from Apple and NVIDIA), the market reacts immediately, often hitting the limit up. Policy incentives also have strong power—if the government announces subsidies for green energy or supports electric vehicles, related stocks are flooded with capital and hit the limit up.

Second: Thematic hype. The market loves chasing hot themes. AI concept stocks surge to limit up due to booming server demand, biotech stocks are frequent winners. At quarter-end, fund managers and major players often aggressively buy small to mid-cap electronics stocks like IC design firms to boost performance, and any news can trigger a wave of limit-ups.

Third: Technical signals of strength. When stock prices break out of long consolidation zones with high trading volume, or when high short interest triggers short covering, it attracts chasing buyers, locking the stock price in a limit-up.

Fourth: Chips locked by big players. When major institutions or big investors lock their positions tightly, there are hardly any stocks available for sale, so a small push can cause a limit up. Continuous buying by foreign investors and funds can have the same effect, making it hard for retail investors to buy at cheap prices.

The culprits behind limit down

First: Negative news shocks. Earnings misses (wider losses, declining gross margins), company scandals (financial fraud, executive misconduct), industry downturns—any of these can trigger panic selling, causing stocks to hit the limit down.

Second: Market panic sentiment. During systemic risks, individual stocks have nowhere to hide. In 2020, the COVID-19 pandemic caused many stocks to hit the limit down. Similarly, during a stock market crash, like the plunge of US stocks and TSMC ADRs, tech stocks in Taiwan also fell to limit down. At such times, fundamentals seem irrelevant; the market’s only emotion is to escape.

Third: Major players offloading and margin calls. After hype and rapid rise, major players may start to sell to lock in profits, trapping retail investors. Even worse, margin calls—like in the shipping stock crash of 2021—can cause a sudden rush to sell, leaving many retail investors unable to escape in time.

Fourth: Technical breakdowns. Falling below key support levels like the monthly or quarterly moving averages can trigger stop-loss selling. Sudden large black candlesticks or volume spikes often signal major liquidation. Once stop-loss orders flood the market, the stock often hits the limit down.

Why are US markets different from Taiwan? Why don’t US stocks have limit up or limit down?

Have you ever wondered why Taiwan has a limit up/down system, but US markets do not? This reflects different design philosophies.

Taiwan’s market uses a “price limit mechanism,” setting daily maximum price changes. Once the limit is hit, the stock price is frozen and cannot move further. This helps prevent excessive volatility and protects retail investors.

In contrast, US markets adopt a different approach—no price limits, but when volatility becomes extreme, trading is temporarily halted through “circuit breakers.”

Market circuit breakers work as follows: If the S&P 500 drops more than 7% in a day, trading pauses for 15 minutes; if it drops over 13%, another pause; if it hits a 20% decline, the market closes for the day. This gives the market time to cool down and prevents panic selling from spiraling out of control.

Single-stock circuit breakers are triggered if a stock moves too rapidly—say, more than 5% within 15 seconds—then trading is automatically paused for a period. The specific thresholds and durations depend on the stock type.

In short, Taiwan “locks” the stock price to prevent further movement; the US “pauses” trading to allow cooling off.

Tips for new investors: stay calm when facing limit up or limit down

Strategy 1: Rational judgment—don’t let emotions dominate decisions

When beginners see limit up or limit down, they often make mistakes—chasing the rise or panicking and selling. This usually results in “buy high, sell low,” the opposite of good practice.

The real approach is to first understand what’s happening. Why did this stock hit the limit up or down? What’s the underlying reason?

For example, if a stock hits the limit down but the company’s fundamentals are solid, it’s often better to hold or even buy more, knowing it’s a short-term market overreaction.

Similarly, when a stock hits the limit up, don’t rush to buy immediately. First, ask yourself: Is there real news or fundamentals supporting this surge? Can this momentum continue? If the answer is uncertain, the safest choice is to wait and observe.

Strategy 2: Indirect trading—related stocks

Sometimes, directly buying the stock that’s locked at limit up or down is difficult. But you can take a different route.

When a leading stock hits the limit up due to positive news, its related upstream or downstream companies, or similar stocks, often follow suit. For example, if TSMC hits limit up, other semiconductor stocks tend to move with it. You can consider investing in these related stocks to participate in the trend without waiting for the limit up to open.

Additionally, many well-known Taiwanese stocks are also listed in the US. For example, TSMC is available on US exchanges. Using cross-border brokers or overseas accounts, you can directly invest in these stocks, participating in the same themes, sometimes more conveniently and at lower costs.

Before starting your trading journey, remember this key point: “Limit up” doesn’t just mean the price is frozen; it’s a signal of extreme market imbalance. Whether it’s limit up or limit down, the true winners are those who can stay calm, judge rationally, and avoid being led by emotions. Next time you see a limit up or down, take a deep breath and make decisions with wisdom, not impulse.