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When did I start becoming interested in the market? The more I look at the prices with fascination, the more I realize that they fluctuate without any specific reason. Just news good or bad, or people's hopes, the prices change. Until I understand that actually, everything comes from the same fundamental principle: supply and demand.
This isn't as complicated as it seems, but once you understand it, you'll see that it explains everything in the market—whether it's stocks, gold, energy, or even digital coins. All of these move up and down based on the same principle.
Let's look at it simply: if more people want to buy something but there's not enough supply, the price will go up. If more people want to sell but no one wants to buy, the price will fall. Between these two forces, the price will find its equilibrium point, called market balance.
When the price rises, it means the buying force wins. When the price drops, the selling force wins. And when the price stays within a range, it indicates that both sides have equal strength—no one is winning or losing at that moment.
In the financial world, factors affecting demand include many things, such as interest rates, investor confidence, earnings forecasts, or even political news. When interest rates are low, people seek higher returns in the stock market, increasing demand. Supply depends on company policies, new listings, or market regulations.
What's interesting is that recently, major events have significantly impacted supply and demand. For example, in March, the Strait of Hormuz was closed due to the Middle East war situation, causing about 20 percent of the world's oil to disappear. This figure is called a supply shock—drastic reduction in supply while energy demand remains the same. The result was a rapid surge in oil prices. This is a vivid example of supply and demand graphs showing that this theory isn't just numbers on paper but has real-life effects.
For investors, understanding this principle is very helpful in reading the market. If you can predict how supply or demand will change, you'll know where prices are headed.
When analyzing stocks, price movements tell a lot. Green candlesticks (closing higher than opening) show buying strength that day. Red candlesticks (closing lower than opening) indicate selling strength. Doji candles, which close at the same price as they opened, show that both sides have equal strength and no decision has been made yet.
In the long term, if prices keep making new highs, it signals strong buying pressure. If they keep making new lows, selling pressure remains. But if prices stay within a range, it means we're waiting for new factors to cause a change.
One technique traders like to use is called the Demand Supply Zone, which tries to catch moments when the price loses balance and swings toward a new equilibrium. When prices rise or fall sharply and then pause within a range, that's when both forces are battling. When new news or factors come in, one side will win, and the price will break out of that range. Usually, the price continues in the same direction until a new balance point is found.
Using supply and demand charts—whether for fundamental or technical analysis—is useful for making investment decisions because it helps us see that price movements aren't random but are the result of two opposing forces clashing. If you understand these forces, you'll be better at reading the market.
The key is to remember that studying this requires practical experience: look at real charts of stocks, commodities, or digital coins, and observe how these principles work in action. The more you practice, the clearer the picture will become.