I've just noticed that many people in the market still don't have a deep understanding of demand and supply, even though it's the core of all price movements—from stocks, energy, gold, to digital assets. Today, let's clearly explain what it is and how to leverage it in investing.

Alright, demand and supply are simply called the desire to buy and the desire to sell. If we look at price trends, when prices rise, it indicates strong buying pressure (demand). Conversely, when prices fall, it means selling pressure (supply) is winning.

Let's talk about demand first. This is the desire to purchase goods or assets at various price levels. The basic rule is: Price goes up → demand decreases; Price goes down → demand increases. There are two reasons for this: First, when prices drop, the money in your wallet gains value, allowing you to buy more. Second, when prices fall, the asset looks cheaper compared to other goods, encouraging more people to buy.

As for supply, it is the desire to sell, which is directly opposite to demand. When prices go up → sellers want to offer more; When prices go down → sellers are willing to reduce the amount they offer. Simply put, when prices are good, who wouldn't want to sell?

This point is crucial: the point where demand and supply meet is called equilibrium. Here, prices tend not to change because if prices rise beyond this point, sellers will want to sell more, while buyers will reduce their demand, leading to excess supply and a price correction downward. Conversely, if prices fall below this point, buyers will want to buy more, while sellers hold back, leading to a shortage and a price bounce back up.

An example from the real market: the closure of the Hormuz Strait in March caused about 20% of the world's crude oil to disappear from the market. This is called a supply shock—supply drops sharply while demand remains steady. The result? Oil prices surged uncontrollably due to the shortage.

In financial markets, demand and supply are even more complex. Stock demand depends on macroeconomic factors like interest rates, economic growth, and investor confidence. Supply depends on corporate decisions such as issuing new shares, buybacks, or IPOs.

When we look at stocks, the price we see actually reflects the demand and supply for that company. Good news increases demand; buyers are willing to pay higher prices, pushing the price up. Bad news decreases demand; sellers are willing to accept lower prices, pushing the price down.

For traders, a popular technique is called the Demand Supply Zone, which uses price trend analysis to find entry points. For example, if the price drops sharply (Drop) and then consolidates in a range (Base), and buying pressure returns strongly, the price will break above the range and rally. That’s a good entry point.

Alternatively, if the price rises rapidly and then consolidates, and selling pressure returns strongly, the price will break below the range and fall. That’s the opposite trade setup.

The key is: if you understand demand and supply, you understand why prices move the way they do. Whether through fundamental analysis (looking at factors affecting a company's value) or technical analysis (studying price and volume movements), both approaches are rooted in the same concept.

Actually, learning this isn’t hard, but it requires practice by applying it to real market prices. The more you observe, the clearer the patterns become. Check the price trends on your trading app, and try to see where demand wins and where supply wins. Over time, this will become more and more obvious.