I just realized that many people are still confused about the concepts of supply and demand, which makes it difficult to understand how asset prices move, even though these principles are simple and truly useful for making investment decisions.

Starting from the basics, demand is the desire to buy, while supply is the desire to sell. The relationship between the two drives the prices of everything—from stocks, energy, gold, to digital assets.

The law of supply states that when prices rise, sellers are willing to sell more. Conversely, when prices fall, sellers will reduce the amount they sell. Demand has an inverse relationship: higher prices cause buyers to purchase less, while lower prices encourage buyers to buy more.

When the demand and supply curves intersect, that point is equilibrium. The resulting price and quantity tend to stabilize because if the price increases beyond this point, sellers will sell more but buyers will buy less, leading to excess supply and downward pressure on price. Conversely, if the price drops below this point, buyers will buy more but sellers will sell less, causing a shortage and upward pressure on price.

In financial markets, demand and supply are influenced by many factors. On the demand side, macroeconomic factors such as economic growth, interest rates, and liquidity in the system play a role. On the supply side, factors include corporate policies, new listings, and regulations.

A clear example is the situation in March this year, when the Strait of Hormuz was closed due to regional tensions, causing about 20 percent of the world's oil flow to disappear. Supply sharply decreased, but energy demand remained the same. The result was a significant spike in oil prices. This is a pure supply shock.

For investors, we can apply this principle to analyze stocks. Fundamentally, stock prices rise or fall based on market expectations of company performance and valuation. Good news increases demand; bad news increases supply.

From a technical perspective, we use tools like candlestick charts, price trends, and support and resistance levels to observe buying and selling pressure. Green candlesticks indicate strong demand; red candlesticks indicate strong supply; doji candles show a balance between the two sides.

The Demand Supply Zone technique is a popular method for timing trades. It identifies points where prices move rapidly, then pause within a range, and break out in the same direction. For example, DBR or Drop Base Rally occurs when prices drop sharply, pause, then rally upward. RBD or Rally Base Drop occurs when prices rise sharply, pause, then fall.

An important thing to remember is that demand and supply are not static. They constantly change based on various factors—news, economics, or even investor psychology. When we understand how demand and supply move, we can better predict price movements.

Learning this principle is not difficult if we are willing to observe real market prices. Look at the trends of various stocks on Gate or other platforms, and see how buying and selling pressures shift. The more you practice, the clearer and more accurate your understanding will become.