I just noticed that many people are still confused about the concept of "supply and demand" and how it relates to our daily lives. Once you understand, you'll see that it’s everywhere in the financial markets.

Simply put, demand is the desire to buy, and supply is the desire to sell. Both are constantly competing, and this competition determines prices—from stocks, gold, oil, to digital assets.

When prices of goods decrease, consumers have more leftover money (income effect), allowing them to buy more. At the same time, they compare with other products and see that it’s cheaper (substitution effect). The result is an increase in the quantity demanded. Conversely, when prices rise, demand decreases. This is a basic rule that all consumers use every day without even realizing it.

But demand isn’t driven solely by price. It depends on income, preferences, the number of consumers, future price expectations, and many other factors. For example, currently, the situation in the Middle East is causing oil demand to surge because transportation routes are being shut down. This is "Demand" not caused by price reduction but by increased demand due to external events.

Regarding supply, it works similarly but in the opposite direction. When prices rise, sellers want to sell more because they aim for higher profits. When prices fall, they are less willing to sell. Factors affecting supply include production costs, competition, technology, and price expectations.

In a case study from March 2026, the Strait of Hormuz was closed, reducing global crude oil supply by over 20%. Meanwhile, energy demand remained high. This is called a "Supply Shock." Oil prices soared rapidly because of the shortage. This is a clear clash between high demand and suddenly reduced supply.

The key point is that the actual market price is at the equilibrium point where the demand and supply curves intersect. If the price rises above the equilibrium, sellers want to sell more, but buyers buy less, leading to excess inventory and downward pressure on price. Conversely, if the price drops below equilibrium, buyers want to buy more, but sellers want to sell less, causing shortages and upward price movement. This system constantly balances itself.

Currently, in financial markets, demand and supply are influenced by more complex factors: economic growth, inflation rates, interest rates, liquidity, investor confidence, corporate policies, and regulations—all affecting the demand and supply of securities. When the economy is doing well, consumers and companies want to invest more, increasing demand for stocks, which then drives prices up.

For traders, understanding supply and demand helps improve price prediction accuracy, applicable in both fundamental and technical analysis. In fundamental analysis, if you expect a company to grow, buyers are willing to pay higher prices, and sellers may hold back, pushing stock prices up. In technical analysis, you can look at green or red candlesticks, trends, or identify support and resistance levels to observe buying and selling pressures.

A popular technique is the Demand Supply Zone, which looks for moments when the price starts to lose balance—excess supply causes the price to drop (Drop), then it consolidates (Base), before reversing upward (Rally). This is a buying opportunity. Conversely, when excess demand causes the price to rally (Rally), then consolidates (Base), before reversing downward (Drop), it’s a selling opportunity.

In reality, the buying and selling desires of consumers are the main driving forces of the market—whether in goods, stocks, or other financial markets. If you understand supply and demand, you understand why prices move and can make better investment decisions. But like everything in markets, it requires real-world testing and observation to truly grasp the picture.