limit up selling principle and practical guide in Taiwan stock market

The basic concept of the limit up.

In Taiwan and other Asian markets, exchanges set daily price fluctuation limits to prevent excessive stock price volatility, generally ±10% of the previous day’s closing price. When the stock price rises and hits the upper limit, it is referred to as the “涨停板” (price limit), at which point the price will no longer increase, and subsequent buying and selling can only occur at that price or below.

Can I sell when it hits the upper limit?

In theory, investors can place sell orders when the price rises to the limit, but whether the orders can be executed depends critically on the order of the sell orders in the queue and the number of buy orders. If the market buy orders far exceed the sell orders, the probability of execution is high; conversely, if there are fewer buy orders, execution may not occur, leading to the phenomenon of a “locked limit rise.”

Trading Matching Mechanism

The exchange matches orders based on price priority and time priority principles. The limit price for a rise is unique, and all pending orders have the same price; therefore, the seller who places the order first has priority in trading, making the order placement time very important.

Observe the internal and external markets to determine the selling opportunity.

If the external market (buy order volume) is greater than the internal market (sell order volume), it indicates strong market buying sentiment and a high likelihood of transactions. Conversely, if the internal market is greater than the external market, it suggests heavy selling pressure and instability in price limits. By combining five-level quotations and detailed transaction data, one can determine whether their sell orders are likely to be executed.

Common Rise Limit Sell Strategy

• Place orders before the market opens, queue up in advance, and increase the probability of execution.
• Set automatic sell orders using broker conditions.
• Seize the opportunity for a second rise limit, sell in batches, and reduce risk.
• Adjust the selling plan flexibly according to market conditions.

summary

Whether one can sell at the limit rise depends on the understanding of the matching rules and the buying and selling forces. Through reasonable order placements and observation skills, investors can achieve stable profits in a limit rise market, rather than just being limited to the rise on the account.