I just realized that the concepts of supply and demand are fundamental principles that are very important for anyone investing, but only a few people truly understand how they work.

This started from observing that the prices of all assets, from stocks, energy, gold, to digital coins, are driven solely by basic forces—namely, buying demand and selling supply. Supply and demand are really just that simple, but a deep understanding of them helps us predict price directions more accurately.

Let's delve into it. On the demand side, (Demand) is the desire to buy goods at different price levels. The simple rule is: higher prices → fewer people want to buy; lower prices → more people want to buy. This has two effects: income effect (when prices drop, our money becomes relatively more valuable) and substitution effect (cheaper compared to other goods). Factors that change demand are not just price; income, tastes, the number of consumers, future price expectations, government policies, technology, and even unexpected events like wars—such as when a war cuts off oil transportation routes—can suddenly spike demand.

As for supply, (Supply) is the desire to sell goods. The opposite rule applies: higher prices → more sellers want to sell; lower prices → fewer sellers want to sell. Factors influencing supply include production costs, prices of alternative goods, the number of competitors, technology, price expectations, climate conditions, tax policies, and access to funding sources. For example, when the Strait of Hormuz closes, 20% of global crude oil disappears from the market immediately. This is a "Supply Shock" that causes oil prices to spike rapidly.

When the supply and demand curves intersect, the price reaches an equilibrium. If the price rises above this point, sellers will sell more, but buyers will buy less → surplus occurs → prices fall back. If the price drops below this point, buyers want to buy more, but sellers sell less → shortage occurs → prices rise again. This is an automatic adjustment system.

In financial markets, supply and demand play the same roles. Macroeconomic factors—interest rates, inflation, liquidity, investor confidence—all influence asset demand. Meanwhile, company policies (like issuing new shares or buybacks), IPOs, and regulations all affect the supply of securities.

Fundamental analysis views stock price movements as driven by supply and demand. When prices fall, it’s due to strong selling; when prices rise, it’s due to strong buying. These buying and selling forces are based on earnings forecasts, company growth, and structural changes that impact profitability.

Technical analysis uses supply and demand through various tools, such as candlestick charts: green candles (closing price higher than opening) indicate strong demand; red candles (closing lower than opening) indicate strong supply; doji candles (open and close at the same level) suggest equilibrium. Analyzing price trends—if new highs are consistently made, demand remains strong; if new lows are made, supply remains strong. Support and resistance levels are points where supply or demand is waiting to buy or sell.

A popular technique is the Demand Supply Zone, which looks for moments when price loses balance—large candles that continue moving until a new equilibrium forms. When the price reverses, there are two types: upward reversal from a plunge (DBR) = drop → pause → rise; downward reversal from a rally (RBD) = rise → pause → fall. When the price continues in a trend (Continuation), there are also two types: upward continuation (RBR) = rise → pause → rise again; downward continuation (DBD) = drop → pause → drop again.

In summary, supply and demand are crucial components that economists, traders, and investors use to evaluate and predict price trends—whether through fundamental or technical analysis. Learning about these concepts requires study and testing with real price data to gain a clear understanding.