I just realized that many new investors in the stock market still don't fully understand the ceiling price and floor price. Today, I want to share my experience about these concepts because they are really very important when trading.

The ceiling price and floor price are the maximum and minimum prices at which you can place orders during a trading session. They are pre-calculated based on the reference price (the previous session's closing price), not decided by the market itself. On electronic price boards, the ceiling price is usually displayed in purple, while the floor price is in light blue, making them quite easy to recognize.

Let me give an example of the ceiling price to help you visualize better. When HPG stock has a reference price of 24,000 VND and is traded on the HOSE with a fluctuation limit of 7%, the ceiling price will be 25,680 VND and the floor price will be 22,320 VND. That’s the basic calculation: Ceiling Price = Reference Price × (1 + 7%), Floor Price = Reference Price × (1 - 7%). Different exchanges have different fluctuation limits: HOSE is 7%, HNX is 10%, UPCOM is 15%.

The benefits of this mechanism are quite clear. It helps prevent buyers from pushing the price too high or sellers from dumping too aggressively in a session. Especially, it protects investors from excessive volatility and price manipulation actions. The floor price helps you minimize losses when the market suddenly moves strongly.

However, this mechanism also has significant drawbacks. When there are too many buy orders at the ceiling price without sellers, or too many sell orders at the floor price without buyers, liquidity can almost "freeze." You might get stuck with unsellable stocks or miss buying opportunities. Additionally, the ceiling price also limits your profit potential in a session. If many stocks hit the floor simultaneously, it can trigger a panic selling effect across the entire market.

In actual trading, I often apply some strategies. If a stock hits the ceiling with a large buy order volume, it indicates strong demand. If I hold it and am in profit, I will wait for the next session to take better profits or sell part of it. But if strong selling also appears, I will consider taking profits immediately to avoid risks.

Regarding the example of ceiling prices during bad news or strong volatility, if a stock is on the floor with low liquidity and large sell orders, I will consider selling to avoid getting stuck. The important thing is not to FOMO on the ceiling price or rush to buy at the floor. The Vietnamese stock market operates on T+1.5, so you cannot buy or sell immediately within the session. Carefully analyze the trend before making decisions.

One important difference that many people confuse is: the ceiling/floor price is not the highest/lowest price during the session. The highest/lowest price is determined by actual supply and demand, so it may never reach the ceiling or floor. That’s why understanding this difference is crucial.

Also, note that not all markets have ceiling and floor price regulations. The Vietnamese derivatives market does, but most international derivatives markets do not. The crypto market has no fluctuation limits at all. Markets like forex, commodities, CFDs also do not have such regulations.

Understanding the ceiling and floor price mechanisms will help you trade smarter. Don’t rush, analyze carefully before acting.