Noticing that when we talk about price movements in the market, we often mention buying pressure, selling pressure, demand, supply, but in reality, what are the factors that determine demand and supply that truly affect the price? It's not just the numbers of price or volume.

To understand this, you need to look a bit deeper. Demand is the genuine desire to buy from people, not just the price, but also other factors such as the buyer's income, future price expectations, even the preferences of buyers. There are also external factors like global situations, government policies, or even investor confidence that changes over time.

The supply side is similar. It's not just the quantity of goods available, but also considers production costs, the technology used, climate conditions, tax policies, and even the seller's own price expectations. Additionally, demand and supply are influenced by the number of competitors, access to capital, and regulations that affect production and sales.

In financial markets, it's clear that when interest rates are low, people seek higher returns in the stock market, increasing demand. Meanwhile, decisions by companies to raise capital or buy back shares directly impact supply.

A real-world example: when the Strait of Hormuz is closed due to war, crude oil supply drops by about 20% globally instantly, while demand remains. The result is a rapid price surge. This is a true supply shock.

For traders, understanding these factors is very helpful because when prices plunge, it might be due to excess supply or selling pressure. When prices rise, it could be due to strong demand. Timing buy and sell decisions depends on whether we can interpret these factors correctly.

What’s interesting is that these factors work together; no single factor acts alone. When the economy is doing well, new companies want to enter the market more, increasing supply. At the same time, investor confidence boosts demand. Both of these influence prices simultaneously.

If someone wants to trade effectively, they need to continuously observe these demand and supply determinants—economic news, government policies, or even geopolitical situations—all of which impact the price movements we see each day.