There’s something I see as extremely important for people who want to enter the stock market or trade assets, but many still don’t truly understand—namely, understanding where prices come from.

Actually, whether it’s stocks, oil, gold, or even digital assets, all prices are driven by the same force: the balance between people who want to buy and people who want to sell. Simply put, it’s demand and supply—plain and simple.

When more people want to buy than want to sell, the price will go up, because buyers are willing to pay more to get that asset. Conversely, when more people want to sell than want to buy, the price will go down, because sellers have to lower their prices to find buyers. That’s it. It’s not as complicated as you might think.

But the problem is that in the real market, there are many factors that affect buying and selling demand. For example, when interest rates are low, investors often look for higher returns in the stock market, which increases demand. Or when the economy is growing well, people have more confidence and come to buy more.

Another thing I often see is this: when unexpected events occur—such as wars or crises—there will be severe changes in demand and supply. A clear example is when the Strait of Hormuz was closed during the Iran war, causing about 20% of the world’s oil flowing through this point to disappear suddenly. At the same time, energy demand remains, so the result is that oil prices surge rapidly. This is what’s called a Supply Shock.

This is something investors need to understand. This simple demand-and-supply framework can help us predict the direction of prices. If we understand what factors drive buying pressure and selling pressure, we can prepare before the market moves.

In fundamental analysis, investors see a stock price as a reflection of a company’s value. If the company has good news, earnings improve, or it shows strong growth, more people will want to buy, pushing the price up. On the other hand, if the news is bad and earnings decline, more people will want to sell, and the price will fall.

As for technical analysis, traders use various tools to observe buying and selling forces as they clash. For example, looking at candlesticks: if the candlestick is green (the closing price is higher than the opening), it shows that buying pressure is winning; if it’s red (the closing price is lower than the opening), it indicates that selling pressure is winning. Or by looking at support and resistance levels—areas where buying and selling forces are waiting for orders.

A popular technique is the Demand Supply Zone, which is used to find timing for entries by observing price movement. When price runs up rapidly, and then starts to pause and form a base, if buying pressure comes back strongly, the price will break higher and continue. Conversely, when price plunges sharply and then pauses, if selling pressure returns strongly, the price will drop further and continue falling.

What I want you to understand is that the demand-and-supply principle is not complicated at all. It’s the foundation of all price movements. Whether you analyze from fundamental data or use trading technicals, if you can read the signals of demand and supply, you’ll understand the market better.

Right now, I’m also keeping track of this, because understanding this simple demand and supply really helps us make better investment decisions. No matter whether it’s stocks on Gate or any other asset—if you want to know more, try looking at the real prices in the market and observe how buying and selling forces move. That will help you understand much more than just reading theory.