I see that many people still don't truly understand what supply and demand really are, even though they are the key to reading the market, whether it's stocks, energy, or even crypto.

Simply put, supply and demand are about the forces of buying and selling that clash in the market. When there are many people wanting to buy (high demand) but the product is scarce (low supply), the price jumps up. Conversely, when many want to sell (high supply) but no one wants to buy (low demand), the price drops.

I've noticed that in financial markets, the movement of all asset prices depends on many complex factors, not just numbers alone. For example, when interest rates fall, investors start seeking returns in the stock market more, which increases demand in stocks. Or when there's good news about a company, buyers are willing to pay higher prices, while sellers hold back from selling.

What's interesting is that supply and demand don't operate alone. They often work together. For example, when the economy is growing well (demand increases), new companies are interested in listing on the stock exchange (supply increases). Both factors influence the price simultaneously.

Recently, I saw a real-life example in the oil market. When the Strait of Hormuz was closed due to the Middle East conflict, over 20% of the world's oil passing through that point disappeared from the market, causing oil prices to spike rapidly. This is a true case of a supply shock.

Now, I apply this principle to analyze stock prices as well, looking for points where prices lose balance and tend to oscillate toward a new equilibrium. The technique called Demand Supply Zone helps me see potential reversal points more clearly.

When prices drop sharply (excess supply) and then pause, it indicates selling pressure is easing as prices go lower, and buying interest begins to come in. If good news appears, prices bounce back up. Conversely, when prices rise quickly (excess demand) and then pause, bad news can cause prices to fall.

For trading, I usually enter trades when prices break through support or resistance levels of the consolidation range, with clear stop-loss points. This method helps me better catch the right timing.

In fact, understanding supply and demand isn't difficult, but it requires practical testing with real asset prices in the market. At Gate, I often observe support and resistance levels and buy/sell pressures at different times to get the clearest picture of supply and demand. Once you understand this, analyzing asset prices becomes much easier.