I just noticed something important that many people might overlook. Amidst the market frustration and loud news, there is a fundamental principle that still controls everything—from stock prices, gold, oil, to crypto. That is demand and supply, which means the desire to buy and the desire to sell.

I understand that many people might find this term confusing. What exactly do demand and supply mean? Let’s break these two parts apart.

The first part is demand, which is the desire of people to buy at different price levels. The lower the price, the more people want to buy. The higher the price, the less they want to buy. This is a basic rule. The second part is supply, which is the goods or services that sellers offer in the market. The higher the price, the more sellers want to sell. The lower the price, the less they want to sell.

What actually happens in the market is when the buying and selling forces meet at a certain point. We call this equilibrium. At this point, the price and quantity tend to stay stable because if the price rises, sellers will want to sell more, but buyers will want to buy less, leading to excess supply, which pushes the price back down. Conversely, if the price drops too low, buyers want to buy more, but sellers want to sell less, leading to a shortage, which pushes the price up.

Demand and supply refer to this principle, which is not only used for natural goods. Stocks and financial assets are also goods. Think about it: when good news comes out, everyone wants to buy that stock. Demand spikes. But supply doesn’t increase, so the price goes up. Conversely, when bad news comes out, everyone wants to sell. Supply increases, demand decreases, and the price drops.

Another interesting example is when the Hormuz Strait is closed. Oil supply drops by more than 20% worldwide suddenly, but energy demand remains the same. The result is that oil prices spike rapidly. This is what happens when supply is hit by a shock.

For investors, understanding what demand and supply mean is very important because it allows you to predict where prices are heading. If you know demand is increasing or supply is decreasing, you can anticipate prices will go up. Conversely, if demand is decreasing or supply is increasing, prices are likely to fall.

Traders often use the Demand and Supply Zone technique to find trading opportunities. When prices rise quickly (indicating strong demand) and then start to pause, that might be when supply is coming in strongly. If the price breaks above, it’s a buying opportunity. If the price drops, it’s a selling signal.

What I want you to understand is that demand and supply are not just theories. They happen every day in the market. Every price movement results from changes in demand, supply, or both. Learning to read these signals will help you make better investment decisions.

If you’re interested in a deeper understanding, try studying different asset prices to see when demand is strong and when supply comes in. You’ll notice patterns. And once you see these patterns, you’ll be more confident in making trades.