I've seen many people ask about supply and demand frequently in investor groups. Let's take a look at what supply really is and how much it affects our trading.

It's actually quite simple: supply is the willingness of sellers to sell, and demand is the willingness of buyers to buy. When both sides meet at a certain point, the price stops there. This is called equilibrium.

I've noticed that many people only look at the price but don't understand where the price comes from. It results from the constant clash between buying and selling forces. If demand is stronger, the price rises; if supply is stronger, the price drops sharply.

Let's look at a real example. Last March, when the Hormuz Strait closed, about 20% of the world's oil passing through that area disappeared from the market instantly. This is what is called a supply shock, causing a severe reduction in supply. But demand remained the same, so oil prices surged and became unbalanced.

In the stock market, supply is the amount of shares available in the market, and demand is investors' desire to buy those shares. When a company repurchases its shares, supply decreases; conversely, when it issues new shares, supply increases.

What I find most important is reading the trend. If the price keeps making new highs, it indicates demand is still strong. If it keeps making new lows, it shows supply is dominant. Trading based on Demand and Supply Zones uses this principle: when the price moves rapidly and then consolidates within a range, a breakout from that range signals a potential entry point.

A green candlestick indicates buyers are winning; a red candlestick indicates sellers are winning. But if it's a doji, it means neither side has control, and the price isn't moving anywhere.

For fundamental analysis of supply and demand, it depends on forecasting company performance and growth. Good news tends to increase demand; bad news can boost supply.

Actually, learning about this isn't difficult if we try to apply it practically. Observe real stock prices on Gate and notice when changes in supply or demand occur due to certain factors. Keep practicing like this, and you'll see the picture more clearly over time.