I just realized that supply and demand really do affect the prices of all assets, from stocks and gold to cryptocurrencies. Even though the world is currently full of chaos, this fundamental principle still governs price movements.

In fact, the laws of supply and demand are not as complicated as they seem. It’s about the desire to buy versus the desire to sell, colliding in the market. If more people want to buy, the price goes up. If more want to sell, the price goes down. It’s all about this clash between the two sides.

Let’s look at each part a little more. Supply is the desire to buy. When prices are low, demand is high. When prices are high, demand decreases. This is the law of supply and demand that causes prices to move. Demand is the desire to sell. Sellers are willing to offer more when prices are high, and less when prices are low.

When both sides find a point where they are satisfied, that’s called equilibrium. The price will stay stable there until new factors come in. If the price is above the equilibrium point, sellers will offer more, and buyers will buy less, pushing the price back down. Conversely, if the price is below equilibrium, buyers want to buy more, but sellers want to sell less, pushing the price up.

In financial markets, many factors influence the laws of supply and demand. Interest rates, system liquidity, investor confidence, and economic forecasts all affect buying and selling desires. When interest rates are low, people tend to seek higher returns in the stock market more. As for supply, it depends on company decisions like issuing new shares, share buybacks, or going public.

Last March, the Strait of Hormuz was closed due to the Iran war. About 20% of the world’s crude oil passing through that point suddenly disappeared from the market. This is an example of “a sharp decrease in supply,” while energy demand (demand) remained. As a result, oil prices surged rapidly because of the shortage.

For traders, understanding this is very useful. We can look at candlestick charts to see buying and selling pressure. A green candle shows demand is strong, and prices can hold at higher levels. A red candle indicates supply is strong, and prices are being pushed down. Doji (where open and close are close) shows a tug-of-war between both sides, with no clear direction yet.

Watching price trends also helps. If prices keep making new highs, demand is still strong. If they keep making new lows, supply is taking over. If prices move within a range, it shows both sides are evenly matched until new factors come in.

The Demand Supply Zone technique is popular for timing buy and sell points. There are two main types: trading reversals and trading continuations. For example, DBR (Drop Base Rally) happens when prices fall sharply due to high supply, then pause. When good news comes out, prices rally again. Traders can buy at the breakout of the pause.

On the other hand, RBD (Rally Base Drop) occurs when prices rise because of high demand, then pause. When bad news hits, prices drop. Traders can sell at the lower breakout of the range.

Trend-following trades (RBR and DBD) happen more often. Prices continue moving in the same direction after a brief pause—either upward or downward—according to the existing trend.

In summary, the laws of supply and demand are the foundation that controls everything in the market. Whether in fundamental or technical analysis, understanding them well allows us to read the market better and make more effective investment decisions. But remember, theories are just tools. Experimenting and studying real market prices are just as important.