I just noticed that all asset prices move according to the same mechanism, whether it’s stocks, gold, or digital assets—and that mechanism is demand and supply.

Actually, this isn’t as complicated as you might think. Let’s look at it simply: demand is the number of people who want to buy, and supply is the amount of goods available for sale. When more people want to buy but there isn’t enough product, prices rise. Conversely, when there is plenty of goods but no one buys, prices fall.

For demand (Demand), the factors that affect it are price, buyers’ income, preferences, and expectations of future prices. For example, if people think prices will keep rising, they rush to buy now, causing demand to spike immediately. For supply (Supply), it depends on production costs, technology, and sellers’ expectations of price.

What’s worth noting is that equilibrium (Equilibrium) occurs when the demand curve and the supply curve intersect. At this point, the quantity buyers want to purchase equals the quantity sellers want to sell, so the price becomes stable. But if new factors come into play—such as the Iran war in March, which closed the Strait of Hormuz and caused global oil supply to drop by 20%—oil prices then surged rapidly.

In financial markets, demand and supply are driven by macro factors such as interest rates, liquidity in the system, and investor confidence. When interest rates are low, investors seek higher returns in the stock market, increasing stock demand. Conversely, when companies raise capital, the supply of shares increases.

To apply demand and supply to trading, a technique called Demand Supply Zone is quite popular. It works by looking for points where the price is out of balance. When price moves sharply up or down, it indicates excess demand or excess supply. After that, the price enters a consolidation zone (Base) to find a new equilibrium. Traders can buy/sell at the breakout points of this zone.

There are two main patterns. First is DBR (Drop Base Rally): the price drops first, then consolidates, and then rises—indicating that demand is coming back strongly. Second is RBD (Rally Base Drop): the price rises first, then consolidates, and then falls—indicating that supply is starting to dominate.

For trend trading, there are patterns like RBR (Rally Base Rally) in an uptrend and DBD (Drop Base Drop) in a downtrend, which occur when new factors cause demand or supply in the same direction as the existing trend to strengthen again.

In summary, demand and supply are not just economic theories, but real tools that help forecast prices in the market. Whether you use them for fundamental analysis or technical analysis, if you understand how demand and supply work, you can read the market better and make smarter investment decisions. Take a closer look at how prices actually move—you’ll see just how well this mechanism works.