I just realized that many people still don't truly understand why stock prices go up or down. Some only look at news, others only look at numbers, but in reality, everything comes down to one thing: the demand and supply graph.

It's the most fundamental concept in economics, but it's also something investors need to understand deeply because it explains everything in the market—whether it's stocks, energy, gold, or even digital assets.

Simply put, demand (Demand) is the desire to buy, and supply (Supply) is the desire to sell. When more people want to buy than sell, prices go up. When more people want to sell than buy, prices go down. It’s nothing more complicated than that.

What’s interesting is that when we look deeper, we see that demand and supply are not solely based on feelings. They are influenced by macroeconomic factors, investor confidence, company policies, and even global events that play a role.

For example, last March, when the Strait of Hormuz was closed, about 20% of the world’s crude oil supply passing through that point disappeared. As soon as that happened, oil prices surged immediately because supply decreased while demand remained the same. This is a clear example of a supply shock.

In the stock market, it works the same way. When a company has good news, investors want to buy, increasing demand, and prices go up. When there’s bad news, everyone wants to sell, increasing supply, and prices decline.

What I like about analyzing demand and supply graphs is that they help us see potential reversal points. For example, when prices drop sharply (Drop) and then start to fluctuate within a range (Base), it signals that selling pressure is easing and buying interest is returning. If the price then breaks upward, that could be a good buying opportunity.

Conversely, when prices rise and then start to oscillate within a range, the buying momentum at high prices is waning, and selling pressure is coming in. If it breaks downward, that indicates supply is strengthening.

The technique called Demand Supply Zone is about applying this concept in trading by identifying points where the price is out of balance and waiting for it to return to equilibrium. Sometimes it reverses quickly; other times, it continues in the same trend.

Understanding demand and supply isn’t difficult, but it requires experimentation and observation of real market prices. If we can predict where a supply shock or demand surge will happen, we’ll know where prices are headed.

For those interested in learning more about demand and supply graphs and how to use them in asset analysis, you can check out the tools and information available on Gate. There, you’ll find comprehensive analysis tools and real-time price movement tracking.