It is clear that studying supply and demand is not just a matter for economists. If you invest in stocks or any assets, understanding this mechanism aims to help you in what way? The answer is it helps you read the market better.

What I observe is that all asset prices come solely from the game of buying and selling pressure. When more people want to buy than sell, the price goes up. Conversely, when fewer want to buy, the price goes down. Simple, right? But the problem is understanding what drives that demand.

Starting from the basics, demand is the desire to buy at different price levels, which has an inverse relationship with price. When prices rise, demand decreases; when prices fall, demand increases. As for supply, it is the willingness to sell, which moves in the opposite direction. When prices go up, supply increases; when prices go down, supply decreases.

Why study this? Because studying supply aims to help you understand which way the market will move. If you know that demand is increasing while supply is decreasing, prices must go up. Conversely, if the opposite occurs, prices must go down.

In financial markets, the factors that determine demand include interest rates, system liquidity, and investor confidence. When interest rates are low, people tend to seek higher returns in the stock market. The supply of stocks is determined by companies’ decisions on capital increases or share buybacks, and new listings of companies.

When studying supply in real markets, you'll see that it’s more complex than just price, production costs, tax policies, or natural disasters—all of these affect supply. For example, when the Strait of Hormuz was closed in March, 20% of the world's oil supply passing through that point disappeared. Oil prices immediately surged because demand remained, but supply sharply decreased.

Fundamental analysis shows that stock prices fluctuate based on market expectations about earnings and growth. Good news makes buyers willing to pay higher prices, sellers hold back from selling, and prices rise. Bad news does the opposite.

When it comes to technical analysis, studying supply aims to help you see buying and selling pressures through candlesticks and trends. Green candles show buying pressure winning; red candles show selling pressure winning. Doji indicates both sides have equal strength.

A popular technique called Demand Supply Zone is used to find trading opportunities. When prices move rapidly up or down, it indicates imbalance. Then, prices pause within a range. When new factors come in, prices break out of the range and continue moving. Traders can enter at these breakout points.

Studying supply and demand isn’t difficult if you understand the basics, but it requires practice with real markets. Watch price movements, try different tools, and gradually you will see the picture. The key is that studying supply aims to help you think systematically, not emotionally. When you know which force wins, you will know how to make decisions.