I just realized that the principles of supply and demand are factors that affect the prices of all assets—whether stocks, gold, oil, or even cryptocurrencies. But many people still don’t truly understand how they work and how to put them to use.

Put simply, supply and demand are the desire to buy and the desire to sell. When more people want to buy, the price goes up. When more people want to sell, the price goes down. But it’s not that simple.

Let’s start with demand. It is the desire to buy goods at different price levels. There is a rule called the **Law of Demand**, which states that when the price falls, the desire to buy increases. This is because there are two effects. The first is the **income effect**: when the price drops, we have more money left, so we can buy more. The second is the **substitution effect**: when the price falls, the good starts to look cheaper compared to other goods, so people switch to buying this one instead.

As for supply, it works in the opposite direction. When prices rise, sellers are more willing to sell more. When prices fall, sellers slow down their selling. This is the case because production costs, technology, price expectations, and other factors influence sellers’ decisions.

The key is **market equilibrium**. When the demand curve and the supply curve intersect, that point is the equilibrium price. If the price is higher than equilibrium, there will be excess inventory, so prices have to fall. If the price is lower than equilibrium, there will be shortages, so prices have to rise. Therefore, the market always tends to return to equilibrium.

When unexpected events occur—such as the war between **Iran**, **Israel**, and the **United States**—the **Hormuz Strait** is closed, reducing oil supply by more than 20% of the world, while demand remains the same. The result is that prices jump rapidly. This is a clear **Supply Shock**.

In financial markets, this principle applies as well. When there is good news about a company, investors are full of confidence, demand for the stock increases, and the price rises. When there is bad news, everyone wants to sell; supply increases, and the price falls.

In technical analysis, we use **Candle Stick Pattern** to gauge buying and selling strength. A green candle (closing higher than opening) indicates strong demand. A red candle (closing lower than opening) indicates strong supply. A **doji** (opening and closing are close to each other) shows that both sides are fighting it out.

Another tool is finding support and resistance. Support is a level where demand is waiting to buy. Resistance is a level where supply is waiting to sell. When the price touches support and bounces up, or touches resistance and moves down, it’s a trading signal.

A popular **Demand Supply Zone** technique is finding points where the price stops balancing. There are 4 main patterns: **DBR (Drop Base Rally)**, a reversal upward after excessive selling; **RBD (Rally Base Drop)**, a reversal downward after excessive buying; **RBR (Rally Base Rally)**, continued upward movement; and **DBD (Drop Base Drop)**, continued sharp decline.

In summary, supply and demand are the fundamental mechanisms that drive all markets. Whether you use them for fundamental analysis or technical analysis, once you understand them deeply, you can read the market better and make investment decisions much more effectively—you just need to practice and study real price movements frequently.