How to sell disposed shares? A guide to解除 under trading restrictions

Have you ever encountered this awkward situation? The stock you bought suddenly skyrockets, and you’re about to make a big profit, but you find you can’t sell it at all — not because you can’t place an order, but because it takes 5 or even 20 minutes to execute a trade, and you’re forced to pay in full. Congratulations, you’ve stepped into the disposal stock trap.

So the question is: How exactly do you sell disposal stocks? Why are the trades being blocked? Is there really no way to get out early?

Why Are Stocks Classified as Disposal Stocks?

Taiwan Stock Exchange’s disposal stock system is simply a way to “cool down” stocks that are overhyped. When a stock experiences rapid surges, trading volume spikes, turnover rate skyrockets, and other abnormal trading behaviors in a short period, the exchange will first place it on the Watchlist. If the abnormal activity persists without improvement, and the stock continues to meet the abnormal standards over several trading days, it will be classified as a disposal stock.

In other words, disposal stocks are not because the company has problems, but because the trading activity has become too “crazy.”

What Restrictions Are Imposed After a Stock Becomes a Disposal Stock?

Once listed as a disposal stock, buying and selling will face multiple restrictions:

First Disposal Stage:

• Matching time changes from anytime to once every 5 minutes
• If a single buy or sell exceeds 10 lots or accumulates over 30 lots, circle deposit trading must be used (full amount locked in the account first)
• Margin trading and short selling are all suspended

Second Disposal Stage: (if abnormal activity triggers again within 30 days)

• Matching time extends to once every 20 minutes
• Regardless of the number of lots, all trades are forced into circle deposit transactions
• Margin trading and short selling remain disabled

What does this mean? It means that when you want to sell, you may have to wait through several matching cycles to clear all your stocks. Trading volume will significantly shrink, liquidity will vanish instantly, and short-term traders will face sharply increased transaction costs.

How to Sell Effectively Under These Restrictions?

Since trading is limited, how can you efficiently sell disposal stocks? Investors need to master some practical strategies:

Strategy 1: Sell in Batches to Avoid Single-Trade Limits

Since exceeding 10 lots triggers circle deposit trading, it’s better to split your holdings. Place multiple orders under 10 lots each. Although you’ll have to wait for matching, at least you can avoid additional payment restrictions. This approach reduces the capital lock-in time for each transaction.

Strategy 2: Observe Matching Periods and Time Your Orders

Matching isn’t continuous, so patience is key. Remember the matching times (5 minutes or 20 minutes). Place your sell orders 1-2 minutes before the scheduled matching to increase the chance of execution. Also, pay attention to market sentiment; if you see funds flowing into the stock suddenly, the matching volume may increase, making it easier to get your orders filled.

Strategy 3: Monitor Capital Flows Closely

During disposal periods, margin trading and short selling are unavailable, so the movement of major funds becomes more transparent. If you see institutional players building positions, it indicates confidence in the future trend, and rushing to sell might cause you to miss potential gains. Conversely, if institutions are offloading, you should follow suit quickly.

Strategy 4: Judging the Stock Price Position Is Critical

The biggest risk during disposal is a downward move. If the stock starts to consolidate sideways after entering disposal status, there’s still a chance to find a selling point. But if it plunges immediately, you need to consider stop-loss. It’s best to observe several matching cycles to see if the price stabilizes before adding more orders.

Different Types of Stocks Have Varying Selling Difficulties

You’ll notice some disposal stocks, like V.S. Electronic (6756), can even rise against the trend after being classified as disposal stocks — these stocks are actually easier to sell because there’s continuous buying interest.

Others, like Yang Ming (2609), tend to fall immediately after being classified as disposal stocks. Selling in such cases becomes a “race” — you need to be faster than others to get out. In a bearish market sentiment, even with batch selling, the prices you can get will keep dropping.

How to Decide Whether to Hold or Not?

The key is whether the fundamentals of the company are still healthy.

If you bought based on the company’s profitability, competitive advantages, etc., then disposal stocks are just temporary trading states and don’t reflect the company’s quality. In this case, patience and holding on until the disposal ban lifts might lead to a new rally.

But if you entered purely on hype, the trading restrictions will help you cool down and reconsider. It might be better to take advantage of the remaining matching opportunities to sell gradually at lower prices rather than being trapped at high levels.

Long-term Holding of Disposal Stocks Requires Caution

For short-term traders, disposal stocks have the most direct impact — no day trading, poor liquidity, and difficulty exiting. But for long-term investors, these restrictions are less problematic because they don’t plan to trade frequently.

Moreover, regulatory requirements force companies to disclose financial reports promptly, allowing investors to better understand operational status. If the company’s fundamentals remain stable, holding long-term until the disposal period ends and the stock is unblocked can often yield unexpected gains.

But the premise is: You must trust the company. If earnings decline or management faces issues, even unblocking won’t save you. Disposal stocks are just temporary trading anomalies, not the root cause of company problems.

In short, how to sell disposal stocks ultimately depends on your judgment of the stock. If you’re optimistic, sell gradually; if not, exit quickly within the liquidity limits and don’t let trading restrictions dictate your actions.