I've just noticed that many people are still confused about what exactly the concept of "demand" is and how it is important for investing. I want to share my understanding of this topic that might help deepen your market insight.

Actually, demand is the desire to buy, while supply is the desire to sell. These two are constantly playing badminton in the market. When more people want to buy than want to sell, prices will rise. Conversely, when more sellers than buyers, prices will fall sharply.

Now, let's go deeper. Demand is the desire to purchase goods or services at different price levels. If the price goes up, people will buy less; if the price drops, people will want to buy more. This is called the "law of demand," which states that there is an inverse relationship between price and the quantity demanded.

Why is this the case? There are two main reasons. First is the "income effect": when prices decrease, our money becomes more valuable, leaving more to spend on other things. Second is the "substitution effect": when the price of this good drops, we tend to buy it instead of other more expensive goods.

Factors affecting demand include price, consumers' income, tastes, the number of consumers, and future price expectations. External factors such as political events, international wars, or seasonal changes can also influence demand.

As for supply, it is the desire to sell goods at different price levels. The "law of supply" states that price and the quantity sellers want to sell are directly related. When prices go up, sellers want to sell more; when prices go down, they want to sell less.

Factors determining supply include production costs, prices of alternative goods that producers can make, the number of competitors, technology, and future price expectations. External factors like weather conditions, tax policies, and access to capital also play a role.

A clear example is in March 2026, when the Strait of Hormuz was closed due to the Iran war situation, reducing global crude oil supply by about 20%. Meanwhile, energy demand remained the same. The result was a rapid spike in oil prices. This is called a "supply shock."

Now, the key point: the actual market price occurs where the demand and supply curves intersect, called "equilibrium." At this point, prices and quantities tend to stabilize because if prices rise, sellers will want to sell more but buyers will buy less, leading to excess supply and downward pressure back to equilibrium. Conversely, if prices fall, buyers want to buy more but sellers want to sell less, leading to shortages and upward pressure back to equilibrium.

In financial markets, factors influencing demand include macroeconomic conditions, interest rates, liquidity in the system, and investor confidence. When interest rates are low, investors tend to seek higher returns in stocks. Factors affecting supply include company policies, capital increases, share buybacks, new listings, and legal regulations.

Applying this to stocks: stock prices are driven by demand and supply. When good news comes out, demand is strong; buyers are willing to pay higher prices, pushing the price up. When bad news appears, supply increases; sellers are eager to lower prices, causing the price to drop.

In technical analysis, we use Price Action by observing candlesticks. A green candle (close higher than open) indicates demand—buying pressure outweighs selling. A red candle (close lower than open) shows selling pressure dominates. We also look at price trends: if prices make new highs, demand remains strong; if they make new lows, selling pressure persists.

A popular technique is the Demand and Supply Zone, which identifies moments when price moves rapidly and then consolidates within a range. When new factors emerge, prices often break out of these ranges and continue in the same direction. Traders can enter at these breakout points.

There are two trading styles: first, reversal trading, such as Demand Zone Drop Base Rally (DBR), which occurs after a sharp decline followed by a consolidation; when buying strength returns, prices rally. Second, trend continuation trading, like Demand Zone Rally Base Rally (RBR), where prices rise, pause, then continue upward.

In summary, demand is the fundamental mechanism driving prices in markets—whether stocks, gold, or digital assets. Understanding this principle helps investors and traders better anticipate price movements. But remember, investing involves risks; thorough study and practice are essential before applying these concepts effectively.