I've just noticed that many people are still confused about the fundamental concept that drives the market—that is, supply and demand, which is the main mechanism that determines prices of stocks, energy, gold, and even digital assets.

Let's understand the basics first: demand is the desire to buy, while supply is the desire to sell. When plotting both on a graph, the point where the two lines intersect is the equilibrium. That’s the price the market accepts.

The law of demand tells us that when prices go up, the desire to buy decreases. Conversely, when prices drop, it encourages more buyers to enter. Two main factors cause this: income effects—when prices fall, your money becomes more valuable—and substitution effects—buyers switch to cheaper alternatives.

As for supply, it works in the opposite direction. Higher prices motivate sellers to offer more because they can make more profit. Lower prices cause them to reduce the quantity they offer.

The event in Iran that led to the Strait of Hormuz closing is a clear example. About 20% of the world's crude oil flows through that point. When supply suddenly drops while energy demand remains the same, oil prices spike rapidly. This is a summary of demand and supply in action.

In financial markets, factors affecting demand are more complex. They include interest rates, economic growth, liquidity in the system, and investor confidence. Supply is influenced by corporate policies, new listings, and market regulations.

When you view stocks as natural commodities, you can apply this principle. Stock prices reflect the demand for the company, not the stock itself. When good news occurs, buyers are willing to pay higher prices, while sellers hold back, causing prices to rise. Conversely, bad news causes buyers to delay purchasing and sellers to rush to sell, pushing prices down.

In technical analysis, we can read candlesticks to see the clash between buying and selling forces. Green candles (closing higher than opening) indicate strong demand. Red candles (closing lower than opening) show strong supply. Doji (opening and closing near the same level) means both sides are balanced.

Price trends tell the same story. If prices keep making new highs, demand remains strong. If they keep making new lows, supply dominates. If prices move within a range, both sides are in balance.

Support and resistance levels are good indicators. Support is where demand is waiting to buy; when prices reach this point, they often reverse upward. Resistance is where supply is waiting; when prices hit this level, they often reverse downward.

The popular Demand Supply Zone trading technique uses this principle to time trades. There are two main types: trading at reversal points and trend-following. In a reversal to an uptrend, prices drop sharply, form a base, and then break above the range on new catalysts, moving higher. In a reversal to a downtrend, prices rise quickly, form a base, then break below the range and fall sharply.

Trend-following trading occurs more frequently. In an uptrend, prices rise, form a base, and rise again. In a downtrend, prices fall, form a base, and fall again.

In summary, demand and supply are not just economic theories—they are practical tools every trader and investor should understand. Learning this requires real-world experimentation with different assets. The more you observe, the clearer the picture becomes.